4 Local Factors That Impact Your Mortgage Process

If you’re like many people, you look online to find the best rate quotes when you first start shopping for a mortgage. Sometimes this can lead to selecting a lender who isn’t local to your area.

This is fine, as long as your lender is familiar with mortgage processes specific to your area. Keep the following local factors in mind to ensure a positive mortgage experience once you choose a lender.

Local rate quotes

Often a friend or real estate agent refers you to a local lender. To get rate quotes for your profile before talking to that local lender, you can check mortgage rates in seconds by entering your purchase price, down payment and credit score range. You can also enter your ZIP code to tailor quotes to your area.

Online lenders compete heavily on rates to win your business, so this search will usually represent the best rates available for your profile. You can use these rate findings to make sure a local lender is offering the best rates.

This is a fast, safe way to screen rates without having too many lenders run your credit. Of course you always want to shop, but you don’t want shopping for a mortgage to prevent you from getting one.

Communication with local real estate agents

Local lenders will be known by local real estate agents. This can help when you’re writing offers to buy homes. Because real estate is so localized, sellers’ agents sometimes advise their clients to be cautious when they see an offer financed by an out-of-area lender. Likewise with your own real estate agent: Because agents specialize down to the city, neighborhood and street level, they often encourage their buyers to work with lenders who have the same local expertise and reputation.

Local lenders also know title and escrow officers, insurance agents, inspectors and other specialists associated with your local property transaction. And because local lenders live in the same community they can offer useful advice about neighborhoods, schools or even good restaurants — just like your real estate agent.

Non-local lenders can quickly win the trust of real estate agents and all other vendors, and you should ask them how they go about doing this. Make sure they’re using a proactive approach to working with all of the parties in your transaction, instead of waiting to be contacted by agents or other vendors.

Local settlement procedures and fees

All local markets have specific settlement procedures and associated vendors. For example, in California a financed real estate transaction is settled by a single escrow company, whereas in New York, it’s settled by separate attorneys representing buyer and seller.

Additionally, each city and state has specific rates for various property-related taxes and local customs for how these taxes are paid by buyer and seller. The same goes for title, escrow and attorney fees.

If you’re working with a non-local lender, make sure they know these local processes and fees. Failing to correctly quote or associate (to buyer vs. seller) these third-party fees on your loan documents can cause your transaction to be delayed or fall apart entirely.

Local property knowledge

Loans are made based on borrowers and properties. Any lender can do a pre-approval, but in the pre-approval phase, lenders are just pre-approving you as a borrower. The loan won’t be finalized until a lender also conducts a thorough review of the property’s title report, contractors and pest inspections (if called for by the purchase contract), and the property condition and value using an appraisal report ordered by the lender.

A local lender will have the appropriate appraisal network in your area, and you need to make sure any non-local lender you use also has this network. Some neighborhoods, for example, have off-market sales that a non-local appraiser may miss. This could cause your appraisal report to come in lower than expected.

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