When a lender lowers their rates below the competition, they tend to get a lot of business. Go figure huh?
What most borrowers don’t realize is that low rates often entail long waits. Lenders get big backlogs, service levels decline, underwriters get overworked, and lenders stop making exceptions.
More importantly, quick approvals and fast closings become a chore. With some lenders, 10-15 business days is usually enough time to close. But, when a lender has the best rates in the market, 10-day closes become a gamble.
The worst part, from a brokers’ perspective, is that some lenders don’t believe in communication. If a lender has a 24 hour turnaround policy, and then takes 5 days to respond to your application, you’d think they’d notify you of such delays in advance. Unfortunately, some lenders consider that an unnecessary courtesy.
In general, best-rate providers are fine for longer closings or refinances. But if you’re a last minute shopper or a procrastinator, don’t expect priority service with your rock bottom rate.
Last modified: April 25, 2014
As a Toronto real estate agent a person who lives in Canada, and also has to deal with mortages, banks and the lot, I do think that it should be a priority of any bank (in the world) to reach a mutual understanding with it’s customers. And the way to this goal is comunication. On the other hand any customer should be informed what the basic policies of his bank of choice are.
Some lenders have recently been as far as 5-7 days behind on their underwriting. Then, when you need something post-approval it takes another 24-48 hours additional. That can really play havoc with on-time closings, and sometimes the borrower has no way to foresee this.
The onus must therefore first be with the lender–to keep borrowers and brokers properly informed of backlogs and delays. Thereafter it is the brokers responsibility to help their client make an informed choice.
Just one opinion…
It’s funny because our problem is not with the lenders but with delays on the part of the broker who can’t seem to tell us how much to make the check out for when the possession date is a few days away. Can someone explain that?
It’s funny because our problem is not with the lenders but with delays on the part of the broker who can’t seem to tell us how much to make the check out for when the possession date is a few days away. Can someone explain that?
I would think that should be the responsibility of your lawyer to advise, not your broker.
This is another example of why the lowest rate isn’t always the best rate. The best way to ensure your getting the best deal is by having a mortgage professional.
The lowest rate is only as good as the lender where it originates from. Unfortunately, some lenders are relying on more “subjective” forms of credit underwriting, and applications which should have no problems getting approved are being turned aside for nothing more than a lender’s “gut” feel. Too many clients are led to believe that a lender will actually fund their mortgage simply because a commitment has been issued. And too many mortgage professionals are busy chasing rates, when we should be coaching clients to understand its always better to close on time and pay a little higher interest rate with a lender who is an advocate for the mortgage industry and its originators, than to be subjected to potential fees and penalties related to not being able to close on time.
Hi Tony, That is so true in so many cases. Thanks for the comment. – Rob