By LUCINDA JOHNSTON
LIVE LOCAL! GUEST COLUMNIST
Like many people, you may start your search for a mortgage lender on the Internet. Before you take that path, read John’s story.
John is a professional with a good job, a costly divorce, a short-sale, and a serious accident that kept him from working for several months. He shopped online for a mortgage and selected a lender with a strong national brand.
What John didn’t know was the “lender” was actually a referral service that directed his inquiry to an out-of-state mortgage broker who paid for those leads. The broker charged high fees, but wasn’t licensed in Florida, did not understand the local market, and was not qualified to handle John’s complex case. Because the broker did such a bad job of assembling his application, John paid more than $2,000 in up-front expenses, and he lost it all when the deal fell through.
He could have sued to try to collect damages, but suing a mortgage broker in one state who represented a mortgage consolidator in another state and dealt with a lender in yet another state would have been a costly and agonizing mess.
OO OO OO
The solution is to shop with local professionals for mortgages and business loans. Here’s why:
• They are your neighbors, and that means you can find them if you need to. If they stop taking your calls (as John’s broker did), you can track them down.
• They live here and want to see their own neighborhoods grow and prosper. For that reason, they are more likely to look for ways to help borrowers succeed.
• They are accountable. Florida regulates the real estate industry and the mortgage business. Local professionals know that if they violate the rules in place to protect consumers, they could be fined or lose their licenses.
• They understand the local market. Large national firms use zip codes to identify property values and payment potentials. Local professionals understand there are “micro markets” within zip codes, so they can find the right loan product for your situation. They will know if the property is likely to appreciate or if it’s already at the top of its value.
• They rely on return business and referrals so they will take the time to treat you right, not just as a case to be dealt with as quickly as possible.
• Fees may not matter. Fees and expenses are strictly regulated, so there may not be much wiggle room for any mortgage professional. Some may be willing to chip in a portion of their fees to help close the deal, but that is a rare exception.
The bottom line is that for mortgage and business loans, it pays to shop local.
Lucinda Johnston is a sales agent for Sunshine City Associates, Future Home Realty, an independent broker in the Tampa Bay area. Live Local! is a publication of LocalShops1, Tampa Bay's leading advocate for small businesses.
FINANCING YOUR HOME
Other than privately funded loans, there are three main options for financing your home:Banks and credit unions, also known as lenders. If you have a relationship with one of them, that’s a good place to start. Otherwise, ask for referrals on a mortgage professional from friends or from your real estate agent. Don’t worry, it’s illegal for an agent to take a kickback for a referral.
Correspondent lenders fund loans in their own name, then may sell it to a larger lender.
Mortgage brokers work with multiple lenders to secure deals and do not make loans.
Things to consider
Are they licensed? In Florida, most mortgage professionals must be licensed by the state, unless they work directly with the lending bank.
Does it sound too good to be true? If it does, it is. Get all offers in writing and keep notes of dates and the names of the people you talk to.
Do they know about special programs? There are federal, state and local programs for all kinds of buyers. Ask if you qualify for any and if they are experienced in managing the application process.
Can you find them? Make sure you have their physical address.Is this someone you want handling the largest purchase of your life? You may have to go with your gut: If it doesn’t feel right, it probably isn’t.