Your choice of lenders may impact your odds of success when bidding on a home

For many Silicon Valley home buyers, the selection of a lender may have everything to do with rates, or personal referrals, or a “brand name”. But did you know that your choice of lender may impact your odds of success when bidding on a home? It is true.

With multiple offers, all kinds of things are factored in.  Many times, the listing agent may have had a positive or negative experience with a banker or mortgage broker, and that  will color how your offer package is received. Some lenders and banks have a wonderful reputation for ontime performance (to steal a phrase from the airline industry). Others, not so much.   Some of the biggest banks may be the worst to deal with because they have a bad reputation within the industry.

Today it’s very common for home buyers in the san Jose area to have their own lender picked out before ever speaking with their future buyer’s agent.  (It used to be more the norm to find the real estate agent first, then find a lender whom he or she had suggested.)

Before deciding upon a lender, chat with your Realtor or other real estate professional about this issue or reputation. Right now, multiple offers are very common in Santa Clara County.  If you expect to be in a multiple offer situation, it is vitally important that you team up with a lender with a stellar reputation.  If you don’t, you may find it even harder to buy your next home!

 

 

 

Direct Lender vs Mortgage Broker: Does it Matter for Buying a Silicon Valley Home?

If you are in the market to buy a Silicon Valley home, you’ve probably noticed that about 1/3 of all real estate listings are distressed sales. Of those, most are short sales but some are REOs or “Real Estate Owned” by a bank or lending institution.  Most Silicon Valley REO listings, and even a few that aren’t bank owned, have comments from the listing agent insisting that the buyer be pre-approved from a direct lender. Some will go so far as to insist that it be Wells, Chase, B of A or some other institution. Or even that the buyer be pre-approved via that listing agent’s hand-picked lender.

Why all the fuss about direct lenders? Isn’t a pre-approval from a mortgage broker just as good? Isn’t that asking a bit much to tell buyers who gets to see their financial info?

Pre-Approval versus Pre-Qualification

Typically, in my experience, when a bank or credit union (both are direct lenders) issue a pre-approval letter, it’s only after the buyer has actually submitted everything (pay stubs, taxes, bank account names etc.) and the info has been verified by the bank, submitted to underwriting and OK’d for a window of maybe 90 days to complete the sale. When they say a consumer is pre-approved, they mean it (the vast majority of the time).  In other words, direct lenders usually don’t write fake pre-approval letters.

Mortgage brokers sometimes do.  (Not the better ones, of course.) What they have in hand may really be enough for only a pre-qualification (or “pre-qual”), not an actual pre-approval.  But sometimes mortgage brokers will issue a pre-approval letter.  We Realtors know that this is not an uncommon problem, and many of us don’t trust a letter from such a lender if the loan agent is an unknown person to us for that reason. With mortgage brokers there’s a crisis of credibility and that’s Problem # 1. (This is not always the case, of course. Many mortgage brokers are very careful and thorough so I am not saying that they are all terrible!) (more…)