More Thoughts on the Lender Report Card

Yesterday I presented a report card for lenders involved in two recent closings that I handled.  You may agree (or disagree) with the letter grades I gave, but the better question is: how can I use this information?

My main intention in grading lenders is to let people know that there's more to a lender than the interest rate it offers.  I think there's a tendency to believe that loans (and lenders) are fungible, and that a 5.5% loan is always better than a 5.6% loan.  That isn't necessarily so.

But part of my problem is that I am very affected by a lender's competence or lack thereof.  It can mean the difference between 1 or 2 hours spent at a closing and 5 or 6 hours spent at a closing.  Does that mean you should choose your lender to make your attorney happy?  Of course not.  Even the worst closing day may be worth it if your savings (in terms of monthly payments) are substantial. 

I think lender service (or lack thereof) is important for two reasons:

1. So that you can accurately assess the worst case scenario, and decide if you can live with it.  The 5 hour closing I recently attended was made somewhat easier because the sellers had already moved in to their new home.  But what if this hadn't been the case?  What if you were trying to sell your house in the morning and buy another house in the afternoon?  What if the funds for your purchase aren't ready in the afternoon?  Do you have to cancel movers? Do you have a place to store your stuff?  What about your family?  Bad lenders can create logistical nightmares.

2. So that you can ask tough questions of your lender before you hire them.  Questions like:

-will I work with one dedicated individual to get my loan approved?

-will one of your representatives be at the closing?

-if not, will a dedicated person be available by phone at the closing?  what is that person's name?

-when you send you loan documents to the closing, do you also send a check for the loan proceeds? if not (i.e. if you send the proceeds by wire), when is the wire sent?