Most homes are purchased with a mortgage. Even those with the means to pay cash for a house, often tend to get a mortgage, especially if the mortgage rates are low. Follow along, as I tell you the pros and cons with lenders and how to select the right one for you.
First, talk to your agent.
Your agent has likely worked with or heard things about certain lenders. Based off my personal knowledge and co-workers’, we know the pro’s and con’s to working with one mortgage broker over another. But the one common denominator is, choose someone local!
Ocean City is a little goofy. Majority of our sales on the island are “condos“. Yes, condos inside a two-unit duplex. When you say “condo” to a lender in Moorestown, they are going to require verification of capital funds, budgets, P&L statements for the condo association, etc. However, most duplex owners do not have a capital fund, property managers, HOA, reserve funds or P&L statements. Without these documents, the Moorestown lender can not proceed with the mortgage application. Now it you hired this lender from the start and it took two weeks to get here, you are now delayed two weeks but you have to start the process all over. Now you’re upset and so are the sellers.
Therefore, save yourself the hassle and go local from the start. Local lenders are familiar with the homes in Ocean City. They know what is needed to get you a mortgage successfully.
Now, let’s get into the two different types of lenders: private or bank.
Next, let’s explore private lenders.
Private lenders are smaller agencies with unique names like Guaranteed Rate, Caliber Home Loans or Evesham Mortgage. These lenders are permitted to underwrite mortgage loans for all of big banks and more. Because they write loans for all of the big companies, they usually have the most amount of lending programs. Say your past credit isn’t great, I guarantee they have a special loan for you. Can’t put down 20%? They have a loan for you.
Second pro to private lenders is their ability to move quickly. They always offer the fastest closing times compared to big banks. That is because their loan originators and underwriters all work under the same roof or close by. So once the application is done, it goes directly to the underwriter for approval. Most private lenders can issue a commitment within 14 days allowing closing within 21 days.
Now let’s look at bank lenders.
Bank lenders are exactly how they sound. They are located inside the bank and it’s kind of the old school way of getting a loan. Wells Fargo, Ocean First, Republic Bank are all bank lenders. They can be known for having the best mortgage rates available. In order to offer the lowest rates, they also have some of the most strict guidelines. They have a strict vetting process to make sure you fit their narrow parameters in order to receive their low mortgage rate. This is the bank’s way of reducing their risk when loaning their money to borrowers. As for timeline, to fully vet a borrower and with originators and underwriters sometimes working in different offices with more clients, they will often need a closing timeline of 30-45 days. A mortgage commitment may be issued in 21-25 days with settlement around 30 days. In rare instances, some applications can become delayed and lead to a 45 day closing.
In conclusion,
use a local lender who is familiar with the town and type of home you plan to purchase. Feel free to shop around for local mortgage lenders for their current rates and programs. The biggest decision is which lender to go with. If you are in a very competitive buying market, you want to offer a fast closing timelines to make your offer more appealing. Private lender would be your best bet in this situation, even if it means a slightly higher rate(but not always). If you have the freedom and time to close on your timeline, have a tremendous credit background and want the lowest rate, feel free to shop local bank lenders.