When It Comes to Mortgages, Stick with the People You Know

If you’re buying a home, your Realtor will help find a mortgage. A friend of mine, Attorney Larry Fox of Chester, gives his clients a warning that’s worth repeating: Stick with mortgage lenders who are local and who you know.

Larry’s been doing real estate law and managing property closing for 40 years, so he’s experienced in this area. He’s not talking about the on-line presence of well-known and respected banks or mortgage brokers. He’s talking about the fly-by-night brokers who promise you big savings. In the end, he says, they can’t deliver.

“You wind up dealing with two sets of people: broker and the lender,” he told me. “You have no control over the process. They don’t understand the process and you can’t find a real person, it’s all done online. It’s very difficult to negotiate with them and get them closed. In the end, you find they’re no cheaper.”

Every state is different, and Larry points out that these online brokers usually are in another state and don’t understand New Jersey’s laws and rules. For instance, one broker wanted certain forms signed before they’d arrange for the delivery of the check. But in New Jersey, those forms are signed at the closing.

Homebuyers pay for their attorneys or Realtors make the arrangements for the closing, including getting the check there. Using these out-of-state brokers requires more time and aggravation on the attorney’s part.

“The rate’s the rate,” Larry said. “It’s the fees you’ll save on, they say. But the few bucks you save, you’ll lose in time and aggravation.”

Larry’s advice is the pretty much the same that we give to all of our buyers.

“Do what you can to negotiate with local banks, local brokers…people who have a good relationship with local borrowers,” he suggests. “Don’t be fooled by advertisements of lower fees because it doesn’t work that way.”

Your Realtor can help you find a mortgage with a reputable local bank or broker. In fact, we recommend you prequalify for a mortgage because it lets you know what you can afford and gives you added negotiating strength when you find something you like.

Shopping around for a mortgage is a wise thing to do. But make sure you’re dealing with a bank or a broker with a good reputation for getting you to the closing table with a check in your hand.