Just a few thoughts from my brain today, about Internet Lenders, fueled by coffee and frustration.
While this is title specifically mentions Internet Lenders, it can also include some of the “Big Banks”, and you’ll see why below. And, of course, all opinions below are mine and mine alone. 🙂
First, let me say I’ve had clients use big named banks and internet lenders (like Quicken) and successfully closed on a new home on-time and with little frustration – aside from the normal stress of providing an obscene amount of paperwork to the lender!
Unfortunately, I’m coming to the opinion that this is the exception, not the norm. A completely un-scientific look back at closed deals seems to indicate that at least 50% of big bank or internet lenders have some type of ‘surprise!’ or delay at the end of a transaction that pushes the closing back or otherwise side-swipes the borrower.
Appeal of Internet Lenders
The appeal of the internet lenders is obvious – huge advertising budgets promising easy, 1-click approvals, and tantalizing interest rates. Surely the service will be the same… right?
Of course, after your internet application, you still need to talk with a Loan Officer (or whatever their title is) who gets the basic information and will be the “point-person” during the process. Often they’re friendly, communicate well, and give you all kinds of Warm Fuzzies about how everything will be handled.
So you find your future dream home, and your Realtor gets you Under Contract! Yay! Congrats!
The lender then sends you a list of a massive amount of backup information they need – W2’s, past year’s tax returns, etc. This is all typical stuff.
The process continues, everything seems on track.
But something is amiss…
What you don’t see
Upfront, I’d like say most every one of the Loan Officers I’ve dealt with are professional and on-top of their business. Truly.
But they are sometimes making the best of a bad situation.
While I don’t truly understand how Lenders are structured, and each Lender can be different, your Loan goes back into the Underwriting/Processing/Closing departments – areas your Loan Officer often has no direct authority (at least as far as I’ve seen!)
Your Loan Officer may be just down the street from you, but these large firms have employees working, often, all across the country. So your loan package is being reviewed, questions asked, new information required, etc. by someone who may be in a different time zone, and may be servicing dozens of loans all at the same time.
This is where it all falls apart.
Everything seems to be moving smoothly, then suddenly nobody returns calls or emails, the paperwork is delayed, “the underwriting department reopened it”, or the loan package is not sent to the closing attorney.
Suddenly, you’re delayed. Your closing is pushed off a day, or perhaps you don’t have enough information to know WHEN to reschedule the closing.
Why is this a big deal?
You’ve made plans. Your lease is up, when you’re getting the moving truck, when utilities are switched to your name. Suddenly, your life is on hold. You may not even know where you’ll be living.
I have to be honest here. The best lenders, with the most personal service, and the best attorneys can all hit ‘snags’ and a closing gets delayed. IT HAPPENS. It’s sometimes an unfortunate truth of the business.
But information flow is king, and if all parties understand what’s happening and why, we can work around it. Stuff Happens.
But when it happens over and over again due to overworked back-office staff who simply can’t keep up, and your closing is delayed and no one can return calls or emails or even by carrier pigeon to tell you what is going on and is there a problem…. it’s just frustrating and makes the excitement disappear.
Can you have good luck with a large bank or internet lender? Sure, millions do every year. And if you chose to use one, I will work to make it as smooth as possible.
But also recognize you have a good chance of a delay and frustration, and far too often it comes with the territory. In my humble opinion, stick with a recommended lender your Realtor can introduce you to who has a proven track-record.
Food for thought. (Gluten free)
Have a great day!
Mahool Nance Team