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Piney-Z Home Owners Association
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Is it okay to use an out of town lender? As a mortgage broker here in Tallahassee, answering this question can present a “conflict of interest”. So don’t ask me or any local lender; ask someone at a closing company. Call Smith, Thompson, Shaw, and Manausa, P.A., or Stewart Title Company, or Owen Title Company and ask them how safe they think it is to come to closing with an out of town lender. They will tell you there are many reputable out of town lenders, some of whom can be found on the internet. But there are some unscrupulous lenders, too, and you may not always know the difference until it is too late. Please understand that loan commitments, even from the best lender in town, will always be contingent upon many factors. For example, if an I.R.S. lien shows up on your credit report three days before closing, your loan commitment will be canceled. If the lender re-verifies your employment and you have lost your job, your commitment will be canceled. If something major changes, you can understand your lender changing their position. But what if the changes are minor? With an unknown, unscrupulous lender, you can walk into closing to find out the loan you expected is not there. The interest rate may be higher, or the terms changed. A quick call to the lender will tell you they rechecked your credit and found that your credit scores has changed, throwing you into a higher category, or a new balance on your Visa has put you in a higher category. Your options will be take the new loan and the new terms, or loose your house. If you loose the house, you could loose your binder, and/or get sued for performance by your seller. If you take the loan, you can always complain later. Good luck. Their stunt may be legal, if unethical. Remember, a “Good Faith Estimate” is an ESTIMATE. You want a lender you can look in the eye. You want a lender whose business depends on the referral you will give them. You want somebody here in town. If you are buying a house listed by an experienced REALTOR® like me who presents your offer to their Seller and you have an unknown lender, expect the REALTOR® to advise caution. If I am presenting two offers, one for $200,000 with a local lender and one for $202,000 with a loan from an online lender, I will beg my seller to accept the lower price and not gamble on actually closing. I have begun asking my Sellers to include the following clause in the contract: “Unless Buyer has had a previous loan with their chosen lender, Buyer agrees to use a lender with a representative with an office in Leon County or forfeit binder and the contract will be void”. An offer based on a loan with a well known, local lender, is a stronger offer.
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