How to Choose an ethical lender

This is me in today’s HooK:

The answer to the question, “How do I find an ethical lender?” is simple – Find someone you trust. Ask them.

Charlottesville, in spite of its growth, remains a small town. Word of mouth carries faster and further than ever. The strength of a lender’s reputation can help you determine whether you want to (or should) work with a particular person. When shopping for a lender, you are shopping for at least two things – Is the person trustworthy? Are they looking out for your best interests?

Finding an ethical lender is more crucial than ever.  As the market shift continues, every week brings new reports of lender layoffs and fraud. Finding a lender who will represent your best interests rather than their own has always been important; even with the web, doing the necessary due diligence is seemingly more difficult than ever.

The foundations of real estate and lending are relationships and reputation. Choose someone who is committed to their community, someone who is invested in bettering their community, someone involved in local associations, organizations, charities … someone whose business depends on your recommending them to your friends and colleagues.

There is nowhere online to “rate a lender” (as there is no “one” place to “rate a Realtor”), so don’t waste time Googling. Talk to your friends who have purchased homes in the Central Virginia area. Find out whom they liked and perhaps more importantly, whom they disliked – bad news travels faster.

While the temptation exists to go online and find the cheapest, best rate – don’t do it. The number one reason in my experience is that the online lenders are not accountable to the Charlottesville community. I can’t tell you how many times local lenders have told me about online brokers’ interest rate locks expiring before closing. (This means that guaranteed rate you were depending on likely won’t be available come closing day, and that 6.25% interest rate may be 7%) To use the cliché – if it seems too good to be true, it probably is.

Or as I put it to my clients, choose someone whose office you can walk into, look them in the eye, shake their hand, and tell them to “fix it,” even if fixing it means they pay for it. Those who are defending their reputations will more often than not do what is right to make the client satisfied.

A few notes –

Do they volunteer a Good Faith Estimate? They should; if they don’t, run.
The “broker versus banker” debate is an entirely different debate to be covered at another time.
Do they offer a wide breadth of options?
Do they try to push you the maximum you can spend, or do they listen to your needs and budget and help you determine what you should spend? Just because you can afford something doesn’t mean you want to.
Shop around; there are plenty of reputable, trustworthy lenders in town.

Finding a good lender, Realtor, home inspector is a matter of trusting someone’s reputation. Spend the time to investigate the person to whom you will be trusting what may be the largest purchase you will ever make.

*the picture of me from featuring last year’s “summer cut” is not flattering, but oh well. 🙂

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1 Comment

  1. Kirk Mortimer September 17, 2007 at 16:37

    Hey Jimmy, Great job with the blog. It has become part of my daily ritual. Liked the “ethical lender” piece…K