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The Importance of Using a Local Lender 

Does it really make a difference if the lender is in Chicago?

A lender is a lender, and it doesn't really make a difference if they are local, right? Wrong. The vast majority of real estate professionals and escrow officers will tell you that using a local lender really can be the difference between a smooth transaction and a pothole-riddled transaction that makes the heart rates of everyone involved jump sky high. Buying a home is in itself a stressful process; adding additional stressors can muddy what is supposed to be an exciting life event.

There is a reason that Realtors will almost always recommend using a local lender. This isn't because they are looking to help their friends or keep the economic dollars in the local economy. It is because of experience.

LUKAS/PEXELS
  • Lukas/Pexels

The first thing to consider is that local lenders live in the community they serve. They shop at the same grocery stores. Their kids are going to the same schools. They are even experiencing the same weather and traffic situations. They know the area intimately and are well-versed in the local economy, market trends and market values. In fact, it is highly likely they know exactly where and have been by the home they are working to secure a loan on. They aren't looking on the internet and trying to imagine the area or interpret property zoning and approved uses.

Using a local lender allows a buyer to work face to face with them. Sit and have a conversation or go over the loan application together, so questions can be answered right away, and the buyer doesn't have to deal with the web and the wait of customer service lines and voice-activated computers. Local lenders often join buyers at the signing table to close escrow, making it easier for those last-minute questions about loan documents and closing disclosures.

Local lenders also have personal relationships with Realtors' escrow officers and those in the local real estate industry. This makes it much easier when a buyer sees a home they love on Sunday afternoon and need that pre-approval letter within the next hour. Personal relationships also equate to accountability. The personal relationships create the real estate team that works closely with one another to ensure a smooth transaction and can troubleshoot potential issues together—again, creating a personalized and smooth transaction that will close on time.

Local lenders stick to timelines and understand—dare I say actually know and read—the state's real estate contracts, law and disclosure laws. I recently had a transaction where the buyer's lender of choice never actually read the contract. Had they done so, they would have known about the property zoning and type and would not have been scrambling 72 hours before close to make the loan work. In addition, they know and are able to explain, to an underwriter why it is not a requirement to strap water heaters down, like they do in California. Or they can explain to an underwriter why a particular area is not considered a flood hazard... in the high desert.

If there is a question about appraised value or even finding an appraiser for a specific property type, the local lender is going to have current and accurate information about current market values and standard appraisal rates.

While that company whose name rhymes with Crockett Mortgage may sound amazing and like it is a simple couple of mouse clicks away from final loan approval and closing, it is always best to speak with real estate professionals in the local area for lender recommendations. Wouldn't it be easier to work with a team of professionals who regularly close transactions together?

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