Home financing is not as simple as the real estate “experts” on Instagram and TikTok may lead one to believe. Purchasing a first house is one of the most significant investments made in most anyone’s lifetime. Which begs the question: How to choose a lender you can trust with one of the most important decisions made in the home-buying process?
Many first-time homeowners turn to the internet, researching as much as possible to educate themselves. The internet is full of information for new homebuyers, some of it good and some of it just the opposite. National banks and online lenders are abundant and quick to provide a pre-approval letter and send buyers off alone into the home-buying jungle. Unfortunately, without solid advice, it’s all too easy to arrive at the closing with unanswered questions – and be surprised by unforeseen costs. To become thoroughly educated about all of the financial aspects of the home-buying process and be fully confident in a purchase, finding a trusted local mortgage lender is a good decision.
What is a Mortgage Lender?
Simply put, a mortgage lender is a financial institution or individual that lends money to people so they can buy a home. Mortgages can be obtained from banks, credit unions, mortgage companies, and private lenders. The buyer then pays the lender back over time, along with interest.
After receiving an application for a loan, the lender analyzes a range of factors to determine how likely the potential borrower is to repay it. The information they use to create a financial profile of the applicant includes the amount of the down payment, credit score, employment history, and existing debt. A history of using credit wisely, illustrated by the good credit score that comes from it, and a steady source of income factor heavily into how much money they are willing to lend and at what interest rate.
Why Local Matters
An applicant is nothing more than a number to a large national bank or an internet lender. There is very little transfer of knowledge or setting up of expectations. But first-time homebuyers generally have a lot of questions, and the big-box lenders’ lack of transparency and accessibility often leaves potential homeowners in the dark.
“As a first-time homebuyer, you don’t know what you don’t know!” says Andy Nolte, a loan officer with Fairway Independent Mortgage Corporation in Kansas City. Time and time again, buyers have come to him with deals that are simply too good to be true that they found online from so-called “real estate experts.”
“There is so much good information online, but there is also a lot of misinformation. Not everyone online is honest,” he says. “It’s best to speak with a professional. As a lender, it’s my job to educate homebuyers on the process so they know what to expect and can feel confident with their home purchase.”
Local lenders give buyers access to a wealth of knowledge and guidance because those seasoned pros know the market and the process inside and out. When last-minute questions or sudden deadlines pop up, the anxious buyer wants someone who will be there when they need them!
“A lender shouldn’t just send out a pre-approval without first educating the buyer on what it means and what they can expect,” Andy says. “When you approach a lender about getting a home loan, there needs to be an initial conversation in which all the questions a buyer may have are answered. Then there should be a fact-finding meeting to figure out how much a buyer can confidently borrow, and what the next steps will look like.”
Working with a local lender is even more crucial for first-time buyers. Today, there are programs and grants available to low-to-moderate-income first-time homebuyers. These come in various forms, such as down payment assistance, reduced interest rates, tax credits, deferred payments, and more. An experienced local lender will work with the buyer to help determine which incentives they may qualify for, easing the pressure of decision-making – and the budget!
There are also several programs available for certain professions, such as first responders, doctors, and veterans, of which most home-buyers are unaware. A local lender is more likely to know about and help provide access to niche programs that can help maximize benefits and savings!
Finding the Right Local Lender
So, how can a first-time homebuyer find a reliable local lender? “The best way to find a local lender to work with is to ask for a referral from your agent!” Andy says. Real estate agents regularly collaborate with lenders and have firsthand experience with lenders who are responsive and trustworthy. A good agent will not only connect a buyer with a lender that is reliable, but one that is patient and willing to educate customers on all the financing options available.
Most Realtors prefer to work with local lenders for a number of reasons. “A recognized local lender will be more responsive, which is crucial during the home-buying process,” says Ellen. “Real estate doesn’t just happen from 8-5, and being able to reach your lender at any time is essential!” Furthermore, working with a local lender can make your offer more appealing, as sellers trust that the process will go smoother with fewer obstacles.
Ways to further check out lenders include reading online reviews and visiting their LinkedIn profiles to determine how long they’ve been working in the industry and other details about their careers. Experience does matter. Be aware, though, even though a lender has a polished social media presence and/or thousands of followers doesn’t mean they have the real-world experience a first-time buyer may need.
Buying a first home should feel empowering. A trusted local lender doesn’t just issue a pre-approval letter along with a quick “congratulations and good luck.” They are a partner in the process, clarifying jargon, confirming costs, and assisting in making smart, informed decisions every step of the way. Forget the hype and hustle of online “experts.” When it comes to something this important, go with someone who’s invested in the buyer’s success, not just their own revenue.
Ellen partners with some of the best lenders in the business – including Andy Nolte! If you’re looking to build your home-buying dream team, give Ellen a call at (816) 489-6950 and Andy at (816) 309-8175!
