You are one in a million if you have enough cash to buy a home! For most people getting pre-approved for a home loan is one of the first steps in the process. And... Now you are wondering, "How do I decide what bank or lender to talk to?" Raising my hand like I'm in middle school again, "I KNOW! I KNOW!" If you have already chosen your real estate agent, ask them "Who have you worked with? Who has a good reputation? What is their close rate?"
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You fully have the right to choose any lender you want to work with but if you are lost and don't know where to begin, try asking your agent for a referral to a great lender. You might be surprised to find out the many benefits using a preferred lender will provide.
1) Previously Established Relationship - Your Realtor will only refer you to a lender that they trust. A Realtor's name is one of the most important factors in their industry. If they were to refer you to a lending professional that was not able to do their job, it would make the Realtor look bad. It is not something that they take lightly. In addition to trust, many agents and lenders collaborate on projects together. This means they have already learned how to communicate with one another. In our office, our lenders are our friends. We often put on classes for first time home buyers in which the Realtor and lender take turns presenting the options and process of buying a home.
2) Vetting - Before you jump the gun on assuming that there is an incentive to your agent, it is illegal for an agent to accept any bribe or kick back by a lender for referring them your business. The lender and agent will have closed multiple transactions together, therefore the lender's ability to close a loan on time and without error will have already been tested and approved by your agent. Working with a lender that is approved by your agent will prevent you from falling for the smooth words of someone just trying to get your business.
3) Smooth Transaction - Since the agent and lender have worked together on previous loans, the paperwork and process should run extra efficiently. After all, their job is to make sure the home buying process is as smooth and pleasant as can be. The lenders I work with treat my friends and referrals like royalty. Getting priority in someone's schedule is just the icing on the cake. In addition to being considered royalty, your agent and lender will be friends. Do you answer your friend's phone calls the first time? I sure do. :) This is a benefit to you in the event that something goes wrong late in the transaction because their relationships are important to one another.
Whether you choose to work with a lender at your personal credit union or one that your Realtor has referred to you, remember that the choice is ultimately yours to make. Write out a pro-con chart if you need to in order to evaluate the differences. I trust you will make the right call in the end.