| Why you
should work with a local Loan Broker
1) The loan
broker represents your interests, not the Bank's interests. Unless you have a very close personal relationship with a bank or a credit union, I strongly recommend that your work with a local loan broker for financing. The experience will be completely different than working directly with a bank. When you go into one of the commercial banks to ask about a mortgage, the bank employee who assists you is not generally involved in the loan process beyond giving you the forms you need and answering some of your questions. That's usually it. You will have little or no direct contact with the department that actually processes your loan. Most important, there will be no one who directly represents your interests, as opposed to the bank's interests. When you work with a loan broker, things are very different. First of all, they represent you. They don't get paid unless you get your loan. And, dealing with a loan broker usually costs you nothing extra: just as airlines and hotels pay travel agents, the banks pay loan brokers out of fees you would pay anyway if you dealt directly with the bank. It is unlikely that any bank employee you encounter will be as knowledgeable about the nuances of the various loan types as a good loan broker. Nor is it likely that a bank employee will be as willing to spend the time needed to explain to you the various loan programs to make sure you get the specific loan that best meets your needs. Furthermore, even if a bank employee were as knowledgeable, it is unlikely that any one bank has available as broad a range of loan program types as does a good loan broker. It is difficult or impossible for you to effectively comparison-shop the loan rates of commercial banks. There is just a practical limit to the number of banks you can contact. Furthermore, interest rates fluctuate constantly. By the time you have checked the last bank on your list, the rates at the other banks could well have changed. What you need is someone who can easily monitor interest rates for you. A loan broker can do this for you, and can do this on a scale you couldn't approach on your own. This is because, in addition to the well-known commercial banks, loan brokers are in contact with various mortgage banks you are not likely to be aware of. One very important thing is that the loan broker you work with be local. At any given moment in any good-sized real estate brokerage, there is at least one agent* walking around wanting to tear their hair out, muttering that they will never again become involved in a transaction with an out-of-area loan broker. This is because problems can come up with out-of-area loan brokers that would never come up with local loan brokers. The first
issue is this. The local real estate agent community is the largest single
source of business for active local loan brokers, and good loan brokers
give great service to the agents they know. Repeat business depends on
it. However, when things are busy, as they usually are, and I call an
out-of-area loan broker with a question or a problem, my call is the last
call that will be returned. The out-of-area loan broker has no stake in
keeping me happy, as they know that there is little chance of their ever
working with me again. Their local real estate agent clients always come
first. A third issue is simple. A familiar, local loan broker's letterhead on your pre-approval letter is reassuring to the agent representing the seller. An unfamiliar, out-of-area loan broker's letterhead can cause concern. As a buyer, especially if your offer is one of several, you want to muster every bit of strength possible. There is really no good reason to work with an out-of-area loan broker, as it is extremely unlikely that they will have available any loan program or loan rate unavailable to local loan brokers. Finally, what do I mean by "local"? For the areas in which I work, I mean a loan broker based in the Berkeley/Oakland-area. I have worked with several highly regarded local loan brokers for many years and am always glad to provide my clients with referrals. * Me, on more than one occasion. Nacio Brown |