This regularly scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!
Question: Does it matter which lender/mortgage company I choose when I purchase a home?
Answer: Choosing a good lender is one of the most important decisions you make during the home buying process. In a competitive market like we’re in now, choosing the right lender goes beyond a low interest rate and access to good loan products; it can be the difference between having your offer accepted or passed over.
Better Pre-Approval: When I review offers on behalf of a seller, I put a lot of value in the quality of the lender/bank who wrote the pre-approval letter for the buyer. A lender who has taken the time to review credit and financial documents, and to get a thorough understanding of the buyer, means the risk of financing falling through is much lower than with lenders who generate pre-approvals based on a short form with inputs from the buyer, without verification.
Most agents representing a seller will contact the lender on the pre-approval letter to ensure they are responsive, personally familiar with the buyer’s financial qualifications and confident in closing based on the contract terms (price, settlement timeline, etc.). Having a lender on your side who will answer the phone and understands the importance of this communication can make all the difference in a competitive market.
Close Faster: Online lenders, larger banks and credit unions often have difficulty closing in less than 35 to 45 days, but a good lender can often settle in less than three weeks. If you find yourself competing for a property, working with a lender who can close quickly will significantly increase the probability of your offer being chosen compared to a lender who needs at least five weeks.
Don’t Miss Settlement
Good lenders do not miss the settlement date. Their reputation and business rely on it. If you miss the contracted settlement date, you’re (usually) in default and expose yourself to risks including losing the Earnest Money Deposit, incurring the seller’s carrying costs or having the contract voided by the seller.
A good question to ask your lender is where their staff works. There are quite a few people involved in getting your loan approved including the loan officer, processor and underwriters. Lenders with a history of missing settlement deadlines often have staff working in different locations that don’t regularly work together. If your lender works in the same physical office as those people, that’s a good indication that they can handle issues efficiently and have a higher probability of meeting the settlement date.
Don’t Get Duped (Interest Rate vs. APR)
Be careful when you’re comparing interest rates, especially online rates. Make sure you’re comparing the Annual Percentage Rate (APR), not the interest rate. Many lenders advertise lower rates by including points (you pay cash upfront for a lower rate) or they charge higher fees. The APR is a measure of the total cost of the loan, including points, fees, and interest rate and allows for an apples-to-apples comparison.
Additionally, the advertised rates are often based on the ideal borrower profile and loan amounts. A true rate quote requires the lender to have your credit information, debts, income, purchase price and down payment. Even with that information, I’ve seen lenders quote low rates to capture a buyer’s attention and then increase the rate/fees once it comes time to lock everything in. Be careful and ask questions.
A reliable pre-approval gives you the confidence that you’ll qualify for the loan you’re applying for. Weak pre-approval letters lead to surprises during the loan application process, which can lead to rejection letters, delays, and/or a lot of wasted time and money. The last thing you want is to find out you don’t qualify after you’ve spent money on a home inspection, appraisal and started packing for a move that may not happen. Having a lender review all of your documents early also gives you time to fix credit scores, debt ratios, and more in order to increase your purchasing power and/or lower your interest rates.
Further, in competitive markets like this, it’s common for winning offers to waive the Financing Contingency (protects your deposit in the event you don’t qualify for your mortgage). Having a thorough pre-approval done can give you the confidence needed to waive this contingency and be competitive, with limited risk.
In most cases, buyers should be considering multiple loan products and finding the best fit. This is particularly true if you’re buying and selling a property, if you’re exploring low down payment options, or if you’re planning to own the property for less than 10 years and can benefit from the lower rates of an Adjustable Rate Mortgage (ARM). A good lender will have access to a wide range of great products and be able to advise you on the type of loan that nets you the best long-term results.
If you’re considering buying or in the process of talking to lenders, I’d be happy to make some recommendations based on your financial situation, type of purchase, and goals. Feel free to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at 703-539-2529.
Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. 703)-390-9460.
I-395 Ramp Closure — “Beginning at 5 a.m. Friday, Dec. 1, weather permitting, the ramp from southbound I-395 to eastbound Boundary Channel Drive (Exit 9/Clark Street) and the eastbound Boundary…
Fully updated; remodeled Bas; open family room w/vaulted ceiling; 1-car garage
Good Thursday evening, Arlington. Let’s take a look back at today’s stories and a look forward to tomorrow’s event calendar. 🕗 News recap The following articles were published earlier today…
A look at the smallest and largest homes sold in Arlington last month, October 2023.
Children’s Weekday Program (CWP) is a non-profit preschool rooted in a play-based philosophy. We focus on developing a love of learning and exploration, cooperation, empathy, and independence.
Our caring and experienced educators create opportunities for children 16 months to 5 years old to play, learn, and grow in a nurturing environment of child-centered and developmentally appropriate experiences.
Initially established more than 50 years ago in South Arlington, CWP continues to be a lauded program in the Northern Virginia area. We are extremely proud to have been recognized as a Best Preschool in Northern Virginia Magazine for the last 4 years.
Located now in North Arlington at 2666 Military Road, CWP offers a part-time parents day out and preschool program with options to extend care both before and after school. We offer a supportive and inclusive school community for children and parents alike and welcome all families to join our school!
The Optimist Club of Arlington is holding its 77th annual Christmas tree sale!
This year, the tree sale will be held at the Knights of Columbus (5115 Little Falls Road). The lot opens for sales on November 24th. The Optimist Club is selling small and large trees ranging from tabletop size to 10 foot tall trees! Wreaths, garland, tree stands, and White House Christmas ornaments will also be for sale.
100% of all proceeds go towards helping Arlington County youth.
For more information, please visit the Arlington Optimists website at https://optimistclubofarlingtonva.org/.
Holiday Art Show featuring artists: Peter Fitzgerald, Claire Plante, Alanna Rivera, and Suzy Scollon. At the Barcroft Community House, 800 South Buchanan St., Arlington, VA. Dec. 8 from, 2 PM to 8 PM and Dec. 9 from 10 AM to
2023 Christmas Tree Sales Begin
Saturday, December 2
Get your holiday decorating off to the right start this year! We will be selling 150 Fraser firs, freshly cut and delivered from Sparta, North Carolina.