If you purchase a home through a realtor, odds are that this individual will advise inner-circle experts to aid you in completing the process. One of these professionals could be a lender the realtor likes to use. Though it may sound worthwhile to use a realtor’s lender, this decision comes with its fair share of positives and negatives.
POSITIVES OF USING A REALTOR’S LENDER OF CHOICE
Using a realtor’s preferred lender comes with some advantages. To begin with, a lot of time is saved. It won’t be necessary to make one phone call after another to find a loan officer. The realtor will introduce you to a loan officer before you move forward. This can save a tremendous amount of time if you opt to use their lender.
After the lender and realtor collaborate, you can expect a smoother process to ensue. Each one understands how the other operates, working together to expedite the process. Your realtor can help prepare you for what a lender will require. Also, realtors know what loan officers will ask for in order to close the deal.
Some lenders and realtors partner-up to motivate buyers into using both. Some money could potentially be saved on closing costs. The interest rate quote you are given may be slightly lower than the ones other buyers received. Mortgage companies can’t give the realtor a kickback, as doing so would be illegal.
Using a realtor’s lender gives you leverage over the competition. Realtors won’t recommend a lender to you that is selective about the loans they close. Realtors will only refer you to lenders who will close a loan after preapproval. The established track record that realtors and lenders have when they work together can be beneficial for a bidding war. If sellers are mindful of the feedback from the partnership of a lender and realtor, then they’ll be more inclined to accept a bid.
NEGATIVES OF USING A REALTOR’S LENDER OF CHOICE
Using the preferred lender of a realtor isn’t all sunshine and roses. Because they both go hand-in-hand, there is no third-party overseeing things on your behalf. It can be worthwhile to have impartial observer reviewing things. A third-party lender might notice something peculiar in a contract, or perhaps what is requested of you by the seller. There isn’t much lender can do, but advising you of such an issue is the red flag you need to look further into things.
You might feel a sense of guilt if you are keeping your options open while dealing with a realtor-recommended lender. We encourage you to obtain quotes from three lenders, at the very least. In doing so, you’ll understand what the interest rates are, on average, as well as what to expect for your loan’s closing costs. A loan officer sent by your realtor might either be more or less expensive. The only way to find out is to shop around.
MAKE CHOICES OF YOUR OWN
You don’t have to use a lender recommended by a realtor. Although it’s convenient for realtors to offer suggestions, it’s up to you to follow them. If you opt to use a mortgage company of your choosing, you still need to be represented by your realtor. The houses you see and make bids on won’t change.
Contrast quotes issued to you from three lenders (at the very minimum) before making any decisions. Your realtor doesn’t have to know that you’re shopping around. In fact, it could be advantageous to you to keep this to yourself, since a lot of lenders will beat or meet other quotes you get. The biggest investment you’ll ever make will likely be a mortgage, so the decision you make must reflect your needs.