When you make the decision to buy a home, or at least just exploring the idea, one of the first things you should do is find a great real estate agent to get things rolling. Your agent will walk you through the entire process from the very beginning to the settlement table. Your agent will answer all your questions as well as ask many of their own. Where do you want to live? What’s important to you? Are top quality public schools a priority? Do you want to live close to where you work? How many bedrooms do you think you’ll need? Do you plan on growing your family? And many, many more.
But before these agents get too far in the question process, they want to know if you’ve spoken with a lender. Further, they will want to know if you’ve been preapproved for a mortgage. Agents will be there to answer questions but before you get in their car to look at homes, they want to know if you’re able to qualify for financing the house you ultimately will want to buy. Most agents will also provide you with some names of local mortgage loan officers. Should you work with a lender referred to you by a real estate agent?
First of all, real estate agents don’t refer a loan officer due to any financial interest. Loan officers don’t pay real estate agents for leads. But real estate agents do have a bona fide interest as it relates to which loan officer and mortgage company you’re going to ultimately land. Why? It’s because the agent wants some assurances the selected loan officer will be able to carry the ball past the goal line. There have been too many times where a contract is signed, an appraisal is ordered and soon about two or three weeks into the process the loan application is declined. Agents do quite a bit of work up front and only get paid when the deal closes. If the loan doesn’t close, all that work is wasted.
When you get a referral for a lender from your agent, you can be assured the agent has successfully worked with that loan officer in the past. Agents have a reputation they need to uphold and having deals fall out at the last minute hurts. Agents want to show homes with confidence to those who have not only applied for a mortgage but have also been preapproved with income, credit and assets verified. Agents want the assurance that once their buyers have applied with a lender they’ve used in the past, they can pretty much put the transaction on auto-pilot. They’re still involved with the step by step process but let the transaction play itself out. Remember, agents represent buyers and sellers all day long, every day. They know what they’re doing and if something hits a bump in the road, they’re there to fix it.
You’re certainly not obligated to use a lender referred to you by your agent, but when doing so, you can bet the chosen lender is experienced, knowledgeable and indeed gets the ball past the goal line on time and as promised.
