When purchasing a home, people spend a great deal of time thinking about the details: Which colors would help to tame those 1970s lime green tiles in the bathroom? Which window treatments will make the counters in the new kitchen pop? Unfortunately, for many people, the name and reputation of their potential mortgage lender is rather low on the list of priorities. Very often, people avoid choosing a lender until the last minute, and often leave the decision up to a third party. I always counsel my clients that it is extremely important to do some research and select a reputable lender in consultation with their attorney for what will likely be the most important transaction of their lives. More and more, I also recommend that my clients select a local lender, as I have witnessed many bad experiences with out-of-state lenders over the past few years.
I have seen many clients who simply borrow from the lender advertising the lowest rate they find through an internet search or hire (and then have to pay) a mortgage broker to do the work. It has been my experience, however, that both of these practices can cause significant problems in real estate transactions. The issue with the some of the lending companies found online is that they may not be familiar with local legal requirements. Even worse, some of these companies advertising extremely low interest rates are more of the “fly-by-night” variety, with very minimal staffing and expertise to handle the questions, issues and problems that may arise in any purchase.
Many purchasers also confuse a mortgage broker with a mortgage lender. A mortgage broker may be a solution for you depending on your particular situation, but always remember that a broker will charge you a hefty fee at the closing for a task that you can do yourself with your lender with just a little bit of effort.
I tell my clients to make a simple table in Excel or Word or even on scrap paper containing the names of potential lenders, the mortgage points they give, their interest rates and the bank attorney fees they charge. Putting all of this information side by side will help you quickly get a handle on which bank can give you the best deal.
|Lender name||Mortgage points||Interest Rate||Bank Attorney fees|
Thus, I submit to those who are thinking about purchasing real estate in the Hudson Valley: consult the local options first when it comes to lending and deal directly with a lender rather than going through a mortgage broker. Do your own research and save yourself some money in the process. Then you can get back to thinking about what to do with those lime green tiles!