Home Buying in Camarillo>Question Details

homebuyer123, Both Buyer and Seller in Simi Valley, CA

How do I know if I can trust my lender?

Asked by homebuyer123, Simi Valley, CA Thu Mar 22, 2012

I'm working with a lender referred by my real estate agent. A couple of weeks ago, when I made an offer on a particular house, he told me he could only get me a 4.375% interest rate for a 30-year conventional jumbo loan. But another lender told me he could get a 4.25% interest rate waiving almost all of his company's fees.

As soon as I explained that to my realtor's lender, he immediately said he could get me a 4.25% interest rate to be competitive with the other guy. So I decided to continue working with my realtor's lender. Unfortunately, we couldn't move forward with the deal because I ended up deciding not to buy that particular house.

A couple of weeks went by, and today I just made another offer on a different house. I contacted my realtor's lender again today, but now he's saying he can only get us a 4.49% rate because of changes in the market.

Is he being honest? How do I know if I can trust the guy -- or any other lender?

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Bonnie Sterling-Realtor’s answer
There are some great answers already here. Rates have gone up but money is still so inexpensive. One suggestion not made here is be checking in with this lender or whomever you settle on frequently as you go through the proocess. Sounds like your rate is up a quarter percent and in a jumbo continued climbs can affect your affordability. Another suggestion is to really think about your experiences thus far with the lender you are talking to. Have they been reasonably timely with getting you information? Are they explaining things to you clearly?

At the end of the day, when you have gone through all the hard work of finding the right home, you are going to need a SOLID lender, the one who delivers the home loan with the costs and rates you agreed to at the beginning. The Realtors recommendation is probably solid because Realtors like to get paid for all their work and if lenders dont perform, they dont get recommended by Realtors.

Which makes it worth stating that if you should be using an experience Realtor that you are satisfied is doing a good job for you, this is just as important.

There is A LOT to put together in a home purchase. You are smart to resource your concerns and focus on the entire picture and cast. Good luck!
0 votes Thank Flag Link Tue Mar 27, 2012
I recommend that my buyers use a direct lender and they shop around and see what different lenders have to offer. Also, interest rates do tend to flunctuate so it would be good to lock in a rate if you intend to buy soon. Also, once you find a home your lender should provide you with a GFE (Good Faith Estimate) which will show you a breakdown of your fees.
Web Reference: http://www.blancadover.com
0 votes Thank Flag Link Fri May 3, 2013
If you are working with a brick and mortar company - BoA, Wells Chase, It's like buying ice cream from the ice cream man that only has Neapolitan ice cream. You get Chocolate, Vanilla or Strawberry, that's all they have on the menu. If you go to a Loan Broker, that is like going to 31 flavors with all the toppings and they sell birthday cakes too. A loan Broker, and one from a larger company for that matter, has a multitude of money sources to shop your loan for the best terms and conditions for your application.

There is no such thing as a no cost loan. Banks don't give money away for free. You'll pay a higher rate if you follow the no cost loan strategy. The rates fluctuate daily and you will drive yourself nuts trying to figure out your rate before you can lock. It's going to be what it is, what it is when you go to lock. News, government etc. can cause changes in the market at any moment. I just looked at the rates on Zillow and they start at 3.750 and go over 4.0 for this moment in time.

Ask for a GFE. Once they issue that document they can't go higher in fees and rates, but they can go lower. And like anything else, you can shop fees to death, but if you save $500 and the lender you pick, screws up your loan and can't close your deal, you could lose your deposit. Looking for a seasoned professional, preferable with an office you can walk through the front door with some accountability and a good reputation is like buying a little insurance. You don't need a fire drill after you waive loan contingencies because someone promised you the moon for lower fees.

Here is a link to a Video walk through of the GFE. There area couple land-mines on that form so be careful. http://homebuysblog.com/2010/06/01/video-blog-gfe-2010-simi-…

Here is an idea of who pays for what in California: http://homebuysblog.com/2011/08/11/who-pays-for-what-simi-va…

One thing I have to stress is that California has different customs and laws in real estate transactions - vastly different than other states. What people do in other states really does not matter. What matters is how it is done where you are selling and buying a home. Our 17 day contingency period is standard across the state in our CAR form. 17 days was not an arbitrary number plucked from the skies. A battalion of attorneys and many many cases of litigation have lead to the formation of the CAR purchase agreement. Our contingency in our CAR purchase agreement as it sits right now is not passive. You have to waive those contingencies in writing (if you did not alter or amend the contract language). Yes that number can be negotiated. You have representation? If so, then the agent that is privy to all the ins and outs of your situation can make a far better consultation base on the situation at hand.

California gets even more interesting because the list of fees I linked in that article I linked, is what is customary for Ventura County. In northern California they do it much differently. Seek advise from season professionals who work the area your are transacting in.
0 votes Thank Flag Link Tue Mar 27, 2012
I would start by asking yourself how well do you know your real estate agent? And then ask your agent questions about this recommended lender like how long have they been working together. Why did your agent recommend this lender over any other lender. Further, ask for two more lenders from your agent and maybe go to Wells Fargo or another bank to talk to them.

I feel like your intuition is spot on...so keep listening to it. I also feel that you are having questions about your real estate agent based on another question you posted. Proceed cautiously. Good luck.

BeachBrokerBill
CA DRE 01775528
0 votes Thank Flag Link Thu Mar 22, 2012
These are XLNT questions!!

Q&A:
1) Same types of inquiries will not affect your score (mortgage vs. auto loan vs. credit card, etc.)
2) This is referred to as "double app'ing" and it's a wise way to position yourself for financing success, as it puts you in the driver's seat. You may have to pay for 2 appraisals, though.
3) Check out this website to learn & compare: http://www.myprospectmortgage.com/sgilman/
0 votes Thank Flag Link Thu Mar 22, 2012
Thank you for the answers. A few questions...

1. if I choose to work with the other lender, I'll need to give him copies of my bank statements, paystubs, tax returns, etc. And he'll also have to run my credit. Since my realtor's lender already ran my credit when processing my paper work, will it hurt my credit to have the other lender run my credit as well?

2. My purchase agreement says I have 17 days to remove all contingencies. Let's assume I ask the competing the lender to process my paper work, do the credit check, etc.... How do I "manage" both lenders? At what point in the 17-day period do I tell them to lock in my rate and give me a final answer?

3. Regarding Barry Shapiro's comment about direct lender vs. loan broker, what's the difference? How do I know which one is which?

Thank you.
0 votes Thank Flag Link Thu Mar 22, 2012
Hello,

Rates did go up a bit this week, but if you don't' feel comfortable with the quotes you've been given, I suggest you do some rate shopping.

I would also suggest you discuss the situation with your realtor, since your realtor referred this lender to you.

Best regards,

Elva Wormley
C2 Financial Corporation
(408) 615-8500
0 votes Thank Flag Link Thu Mar 22, 2012
Shop it around again. Rates did go up I'm the last few weeks but you may be able to have them compete for your business. Keep in mind that not all lenders will close the deal on time.
0 votes Thank Flag Link Thu Mar 22, 2012
Mortgage rates recently flew past 4% [ http://money.cnn.com/2012/03/22/real_estate/mortgage-rates/i… ]. Fees and points are in ALL MORTGAGE LOANS, whether you think they are, or not. The lender can adjust the figures by charging you a higher, or lower rate. I would recommend you work with a Direct Lender, and not a 'loan broker' ... All lenders are required to present you with a HUD-1 Truth-in-Lending Closing Cost Estimate (be sure to read it) --- and in the big picture, rates are super low, and home prices are super low... So 'Just Do It!'
0 votes Thank Flag Link Thu Mar 22, 2012
I always tell my clients to shop around for a mortgage. I would strongly suggest you call the other lender, the one that gave you the better interest rate and fewer fees last time. Call one other lender as well. Ask for a Truth In Lending Statements, place them side by side, and choose the best one, the one with the lowest interest rate and the fewest fees. THIS TIME, stick with which ever one gikves you the best deal. I don't know about you, but I try to stick with vendors who give me the best deal, the first time, without me having to play one vendor against the other.
0 votes Thank Flag Link Thu Mar 22, 2012
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