02/05/2017 by Deb Federico
The Case For Keeping It Local
When you think about purchasing a home you consider what your needs are and try to balance it with what you want… open concept, with large updated kitchen, two car garage, outdoor living space with a pool… you get the idea. Before you lose yourself in daydreaming consider what it will take to get there. When you purchase a home it can be a joyful experience or like the 20th hour of labor, something you don’t want to experience ever again and the difference is usually the players.
My personal experience buying real estate highlights this. When I purchased my townhouse through a short sale the real estate agent I hired was great but even she could not prepare me for the horrific way my bank handled the transaction. In the end the closing was delayed three times. Before the 4th closing date I was informed by the lender that I had to come up with an additional $10,000 for my down payment (this was in 2011 when the banks were still reeling from the financial crisis) all this to say, it did finally go through but the whole transaction took about 7 months with a lot of stress and tears. This large bank was not local so other than the loan originator there was no one else to contact to figure out what was going on. Now, I’m well aware that the banking industry at the time was still in turmoil, however, since I have been a licensed real estate agent the majority of transactions involving a lender from outside the state have resulted in delays.
Just this past year a loan was denied by an outside lender unless we found a way to remove an underground storage tank that housed heating oil for the house (something we allow in New Hampshire) but the delay added a unbelievable amount of stress to everyone involved and delayed the closing by over a month.
Not that I have never heard of a smooth transaction from an outside lender, I have, but the percentage of transactions that proceed smoothly in my opinion isn’t worth the risk.
My suggestion is to do your homework.
- There is more accountability when the lender is local.
- They’re more sensitive to their local reputation.
- They are familiar with the programs available in the state. (Which towns are eligible for a USDA Rural Development Loan or how the Home Start Homebuyer Tax Credit works)
Most lenders large and small have competitive loan options so don’t base your decision solely on an advertised interest rate.
- Ask them how many loans they process and service in the state?
- Are they familiar with the different programs available within the state?
- How will the lender communicate with you and how often?
- Who will be your point of contact throughout the transaction?
Assembling the right team up front (real estate agent, loan officer, closing company and/or lawyer) could have a great impact on your whole experience. So before you hit the send button to farm out your loan request to any lending institution that will respond, drive through the towns you are looking in and check out some local lenders or contact your local REALTOR for some recommendations.
Here’s a great article that highlights staying local when buying in their state.