Importance of a good, LOCAL lender (and appraiser!)

There are so many factors and services that go into the home-buying process that can have a direct effect on the outcome of the transaction, or how easy/hard the deal is for all parties involved. Today I'd like to stress the importance of having a reputable, local lender. Partially because it is something that is affecting a sale right now and partially because it is just that important.

First off, not all lenders are the same. Just as not all Realtors are the same. Some are ethical, some are not; some are good, some are not good. Be like Indiana and choose wisely. If you do not have a good rapport with your banker (many people like to "keep it in the family" and if they have banked with Bank of America, Hometown Bank, Chase Bank, or Prosperity in the past, they'll often choose to get funding from one of these institutions), ask your Realtor. We are not allowed to just recommend any lender to our clients, but we can give you the names of the ones we've had positive experiences with (aka, they have done a good job and we'd feel comfortable if you used them!).

The importance of your lender's location is this: the appraisal process. Once you have been pre-approved for your loan, have found your dream property with your Realtor, and have an executed earnest money contract, there are still requirements that must be met (unless perhaps you are lucky enough to be paying cash for your property) to ensure that the price you have agreed to pay is representative of the current market. In English, the bank wants to make sure you aren't overpaying for this property so in case you can't pay and they have to foreclose, they won't be stuck trying to resell a money pit that you paid too much for in the first place.

Appraisers are independent of the lender. The lender orders an "unbiased" licensed appraiser to assess the value of the property in question and then report back to the lender so they know they are lending a reasonable amount of money to you based on the home's worth. This appraiser can kill a deal if he/she is not knowledgeable of the market in which you are buying. In areas where you have a master planned community and all houses are very similar in size, style, and amenities, appraisals are not a huge issue. In Galveston, though, appraisals are huge. Location is a big factor, and value in location can vary by as much as 3 blocks or 3 houses.

Bottom line, pick a good lender who has a good reputation. And returns phone calls. And shares their cell phone number with you. Make sure that if they do not live in the area you are buying, that they understand the importance of hiring an appraiser that is familiar with that area, and maybe even make sure that they are members of that local Board of Realtors.