Buying a home involves a lot of decision-making. As with anything, price is a huge consideration, and it’s no different when shopping for rates. Going with whoever offers the cheapest rate is usually the most persuasive route for any homebuyer. But like anything else, you get what you pay for, and cheaper is not always better. Unfortunately, I’ve learned this lesson firsthand.
When I purchased my first home, I chose a well-known online bank as my lender. I’d been warned that my experience with these banks would be rough at best. The lower rate was too tempting to ignore, so I threw caution to the wind and went with them anyway. How bad could it honestly be? While balancing life with a newborn, various other family commitments, and my own career thrown into the mix, I soon found myself also having to manage the circus that was my lender. After a slew of lost documents (that I was asked to provide numerous times), being passed off to various new contacts each week, and having barely survived multiple mental breakdowns, we made it to the closing table. But, after eight hours of sitting, the closing was inevitably delayed, and we were sent home without our keys. Of course, hindsight is 20/20, but if you’d told me that I could have spent .3% more and had a smooth and seamless process that I didn’t have to manage firsthand, I would have run with that option and never looked back. So, what’s the better choice? Enter your local lender.
We’re in a highly competitive market where multiple offers are the new normal. When all other offer terms are equal, the listing agent and seller will look at the lender you’re using. More often than not, this is the determining factor. Given a choice between working with an online bank versus a local lender, the local lender will win every time. Listing agents and sellers strongly prefer working with buyers using a local lender because they know the deal will be much smoother, more likely to appraise, and more likely to close on time. This is because local lenders are typically known for their efficiency in decision-making and processing. They often have streamlined procedures, allowing quicker approvals and closing times compared to larger financial institutions. This is especially advantageous in competitive real estate markets where quick financing approval can make the difference in securing your dream home and can be a game-changer in the fast-paced real estate market where time is of the essence.
If your offer is accepted and you are using an online bank, it can be the difference between staying in contract and closing! Real Estate rules, regulations, and processes vary from state to state. If you’re using a non-local lender, chances are you’re working with someone who is out of state and therefore unfamiliar with your regional processes. They may be overly dependent on you, your agent, and your attorney to keep in line with these local guidelines. This added responsibility and management cause friction and delays. As a real estate agent, I’ve experienced this firsthand. A deal was about to die because the out of state lender was so out of touch with our local processes and ultimately fell behind every deadline with little to no communication. We were, luckily, able to bring on a local lender who was able to swiftly secure financing and ultimately save the deal all while keeping the buyer, agents and attorneys up to speed in every step of the process. This is because local lenders profoundly understand and know the regional real estate markets. They are well-versed in the local trends, property values, and community nuances. This knowledge allows them to provide more accurate appraisals and assessments and ensure borrowers make informed property investment decisions.
Then there’s the service. Think of working with the DMV versus an associate at Nordstrom. Unlike larger national institutions, local lenders offer highly personalized services because they prioritize building client relationships. This customized approach means borrowers can expect tailored advice with one point of contact and a level of customer service that extends beyond the transaction, making an otherwise stressful process much smoother and more enjoyable. They are easily accessible, making communication more straightforward. Borrowers can schedule face-to-face meetings, ask questions in person, and receive hands-on guidance throughout the loan process. This accessibility fosters transparency and trust, which are crucial to successful real estate transactions.
It also means supporting the local economy. They are invested in the community’s well-being as they live and work in the same area. The success of local businesses, including real estate, contributes to the community’s overall prosperity. This sense of shared interest can lead to a more collaborative and mutually beneficial relationship between borrowers and lenders.
So, while the real estate market continues to evolve, the importance of choosing the right lender remains constant. The benefits go beyond the transaction itself. The depth of local market knowledge, personalized service, community impact, accessibility, and flexibility make local lenders an invaluable resource for anyone navigating the home buying journey. Ultimately, deciding to go local is not just about the rate; it’s about establishing a lasting relationship built on trust, expertise, and a shared commitment to the community’s success. That’s something that the cheapest rate can’t buy.
Written by Hayley Westhoff