Need help choosing a mortgage lender when moving across country
February 13, 2020 4:20 PM Subscribe
My real estate agent is pushing me to use a local mortgage broker rather than USAA whom I've used for banking for decades, I can't see any reason to do this and it feels a bit like they're just trying to funnel my business to their friend. Thoughts? Should I be hesitant to use USAA for a mortgage?
I'm starting a new job in AR in early August. My wife and I will be moving there from NY and plan on buying a house. Our credit score is pretty excellent and we can handle a %20-30 down payment on whatever we're looking at. We've been with USAA as our bank for years and were inclined to go through them to secure a mortgage. The real estate agent we've been talking to is urging us to go with a local mortgage broker and I can't see why. They tell us that USAA is under investigation but my google isn't finding that to be the case. I'm getting suspicious that they're just trying to steer business to a local friend, but maybe I'm being paranoid?
I'm starting a new job in AR in early August. My wife and I will be moving there from NY and plan on buying a house. Our credit score is pretty excellent and we can handle a %20-30 down payment on whatever we're looking at. We've been with USAA as our bank for years and were inclined to go through them to secure a mortgage. The real estate agent we've been talking to is urging us to go with a local mortgage broker and I can't see why. They tell us that USAA is under investigation but my google isn't finding that to be the case. I'm getting suspicious that they're just trying to steer business to a local friend, but maybe I'm being paranoid?
As I understand it there can be advantages to using a local lender, especially if your loan is in any way marginal - they know the market better, etc. Ultimately it's very likely that your loan will be sold on somewhere else. But a good real estate agent would, like, tell you that rather than shitting on your preferred lender. Your agent sounds like they're prioritizing their kickback from the local lender over your preferences and/or wellbeing.
If I were you I'd consider getting a new agent, but otherwise go ahead and get preapprovals from one or more local lenders AND USAA.
posted by mskyle at 4:29 PM on February 13, 2020 [2 favorites]
If I were you I'd consider getting a new agent, but otherwise go ahead and get preapprovals from one or more local lenders AND USAA.
posted by mskyle at 4:29 PM on February 13, 2020 [2 favorites]
There's no reason you can't get a quote/pre-approval from more than one lender. You should go with whatever reputable bank gives you the best deal. When I google for USAA problems, I see that they settled something with the CFPB for $12 million related to correcting account errors in bank accounts. That does not seem like a mortgage-related issue, but I haven't studied it. If you have a military connection, you should check Pentagon Federal too for a rate/quote. I have found them to have good rates and have closed on loans with them multiple times with no problems/no surprises.
posted by Mid at 4:42 PM on February 13, 2020 [1 favorite]
posted by Mid at 4:42 PM on February 13, 2020 [1 favorite]
The preference for local lenders is somewhat reasonable, since the agent has less certainty that your bank will appraise in a timely fashion, agree on market value, and make everything come together. I don't think this is a big risk, but I can see where an agent (who gets paid on closing) wants to be as certain as humanly possible that everything will appraise and get funded.
That said, the claim that you should do so because USAA is under investigation smacks of bullshit. I would switch real estate agents over that alone, because it would break my trust.
I'm a USAA member, but I wound up with one mortgage from a local bank due to underwriting problems (a condo with an HOA that had issues), and one from better.com because it was easy to underwrite and it was the cheapest possible option. I would've been fine with USAA, though.
posted by whisk(e)y neat at 5:02 PM on February 13, 2020 [1 favorite]
That said, the claim that you should do so because USAA is under investigation smacks of bullshit. I would switch real estate agents over that alone, because it would break my trust.
I'm a USAA member, but I wound up with one mortgage from a local bank due to underwriting problems (a condo with an HOA that had issues), and one from better.com because it was easy to underwrite and it was the cheapest possible option. I would've been fine with USAA, though.
posted by whisk(e)y neat at 5:02 PM on February 13, 2020 [1 favorite]
I first had this experience a few years ago, and strongly suspect that my realtor was prioritizing helping a friend who was a local lender and/or got kickbacks. When my husband and I were under contract for another house more recently, we had the same hard sell job from our realtor and my suspicions were the same. If I were being charitable, I would say that both realtors were strongly incentivized to want the house sale to close, since that is how they get paid, and they wanted to work with a local lender known to them to close on time. I think this was partly true, but I also think there were crasser motives at play. And in any case, given that I am the one who has to pay the mortgage, half a percentage point better mortgage rate makes a huge difference to me every single month for the next 30 years and I was thus unwilling to go with my realtor's friend with the higher rate.
On both occasions, I ended up looking at, say, the best four or five rate quotes (mostly online lenders), and choosing the best-reviewed lender in that group. I focused on reviews that commented on a smooth and on-time closing. I recently had a wonderful experience with HomeFinity (Jeff Groff): they offered us a 15-year mortgage rate of 3.5%. He wasn't the lowest rate but was one of the lowest. (We could have gotten something like 3.25 but we would have had to have waited much longer to close, and our contact with that lender was much less willing to answer our questions about specifics (what the rate included, points, etc. HomeFinity was much more transparent and Jeff spent an hour or so talking through options with us.) Jeff and his team worked after hours to help us close in under 3 weeks. I would highly recommend the experience. The mortgage has been sold on a few times since closing, and while that's been a bit frustrating in terms of figuring out whom to pay and how, I appreciate that that is the trade off for the excellent rate we got and I understand that most lenders sell on their mortgages after closing anyway. I'd still rather pay dozens of dollars less every month for 30 years than have a warm fuzzy experience for a few weeks while under contract. YMMV.
Don't let yourself be bullied into choosing a lender that your realtor drives you towards. Do your research and pick the lender you're comfortable with and prioritize what you want to prioritize in the choice - whether that's patronizing someone you've worked with for decades, finding the lowest rate, or something else . It's your mortgage and you deserve to have your choice.
posted by ClaireBear at 5:03 PM on February 13, 2020 [1 favorite]
On both occasions, I ended up looking at, say, the best four or five rate quotes (mostly online lenders), and choosing the best-reviewed lender in that group. I focused on reviews that commented on a smooth and on-time closing. I recently had a wonderful experience with HomeFinity (Jeff Groff): they offered us a 15-year mortgage rate of 3.5%. He wasn't the lowest rate but was one of the lowest. (We could have gotten something like 3.25 but we would have had to have waited much longer to close, and our contact with that lender was much less willing to answer our questions about specifics (what the rate included, points, etc. HomeFinity was much more transparent and Jeff spent an hour or so talking through options with us.) Jeff and his team worked after hours to help us close in under 3 weeks. I would highly recommend the experience. The mortgage has been sold on a few times since closing, and while that's been a bit frustrating in terms of figuring out whom to pay and how, I appreciate that that is the trade off for the excellent rate we got and I understand that most lenders sell on their mortgages after closing anyway. I'd still rather pay dozens of dollars less every month for 30 years than have a warm fuzzy experience for a few weeks while under contract. YMMV.
Don't let yourself be bullied into choosing a lender that your realtor drives you towards. Do your research and pick the lender you're comfortable with and prioritize what you want to prioritize in the choice - whether that's patronizing someone you've worked with for decades, finding the lowest rate, or something else . It's your mortgage and you deserve to have your choice.
posted by ClaireBear at 5:03 PM on February 13, 2020 [1 favorite]
Best answer: Hi! Founder of a mortgage lender here. Our mission is "Make Ethical Mortgages Easy".
Your real estate agent is trying to refer you to a friend, possibly so they can (illegally) collect a kickback. The other upside for them is they can work with the person they know directly to smooth out the transaction rather than have to go through you as an intermediary.
USAA is a highly reputable institution. Honestly, if you're feeling pressured, I would be very suspicious of your agent. There are other vendors they may push you towards (home inspectors, settlement agents, etc), and I would go out of my way to not use their recommendations. It's entirely possible if they like a home inspector, it's because that home inspector does a less than thorough job and don't stand in the way of a sale. For home inspectors, choose someone off of ASHI's list: https://www.homeinspector.org/
Feel free to DM if you have more questions. The lender I founded doesn't operate in AR, so I won't try to push you towards anything. I just hate to see folks get taken advantage of when they're making what is usually the largest financial decision of their life.
posted by AaRdVarK at 5:46 PM on February 13, 2020 [13 favorites]
Your real estate agent is trying to refer you to a friend, possibly so they can (illegally) collect a kickback. The other upside for them is they can work with the person they know directly to smooth out the transaction rather than have to go through you as an intermediary.
USAA is a highly reputable institution. Honestly, if you're feeling pressured, I would be very suspicious of your agent. There are other vendors they may push you towards (home inspectors, settlement agents, etc), and I would go out of my way to not use their recommendations. It's entirely possible if they like a home inspector, it's because that home inspector does a less than thorough job and don't stand in the way of a sale. For home inspectors, choose someone off of ASHI's list: https://www.homeinspector.org/
Feel free to DM if you have more questions. The lender I founded doesn't operate in AR, so I won't try to push you towards anything. I just hate to see folks get taken advantage of when they're making what is usually the largest financial decision of their life.
posted by AaRdVarK at 5:46 PM on February 13, 2020 [13 favorites]
I had a similar experience with my agent, who tried mightily to dissuade me from getting my mortgage through my credit union. Said they'd drag their feet, it would take too long and the deal would fall through, he'd seen it happen so many times. But I had no trouble.
posted by Rash at 5:54 PM on February 13, 2020 [1 favorite]
posted by Rash at 5:54 PM on February 13, 2020 [1 favorite]
Best answer: Bear in mind at all times when dealing with real estate agents that they derive their income from vendors' commissions, not from buyers. They do not have a financial incentive to advantage purchasers; rather, the more they can extract from a purchaser by all available channels, the better any given sale looks for them.
If you're in the market for a home, take everything an estate agent ever tells you with a grain of salt. Everything. Reputation and people skills are all very well, but their actual job is to persuade you to pay as much money as possible to their vendor. They're not your agent, they work for their vendors. Never forget it.
posted by flabdablet at 6:51 PM on February 13, 2020 [2 favorites]
If you're in the market for a home, take everything an estate agent ever tells you with a grain of salt. Everything. Reputation and people skills are all very well, but their actual job is to persuade you to pay as much money as possible to their vendor. They're not your agent, they work for their vendors. Never forget it.
posted by flabdablet at 6:51 PM on February 13, 2020 [2 favorites]
From a former real estate broker: Realtors are in bed with everybody. Every relationship with every vendor is intentionally reciprocal. The office I worked out of had a mortgage broker and a senior real estate attorney on site.
I opened two out of my three mortgages with USAA and both of them were sold relatively quickly.
posted by bendy at 7:05 PM on February 13, 2020
I opened two out of my three mortgages with USAA and both of them were sold relatively quickly.
posted by bendy at 7:05 PM on February 13, 2020
You can use a different real estate agent just like that agent is pushing you to use a different mortgage company. It's your money, and you should ultimately decide who's going to help you spend it; if you're comfortable with USAA, find a realtor who won't try to dissuade you from using USAA.
posted by pdb at 7:29 PM on February 13, 2020
posted by pdb at 7:29 PM on February 13, 2020
I want to reiterate that some of this may be your agent wanting you to go with a local lender whose processes he is familiar with. I've had a mortgage with USAA and a mortgage with a local lender. The USAA mortgage was a BEAR to close - things took way longer than they should have, including employment verification (my spouse was in a classified position and getting his employer to provide verification took SO LONG and you'd think USAA would be familiar with that process but they were just completely BAFFLED by this process). I was pleased with our rate from USAA and I liked having our mortgage with USAA while we had it, but underwriting was just the worst. And the entire time, our agent and the seller's agent both were really frustrated with the extra time it was taking for underwriting, etc. It didn't threaten our closing, but it made everyone much more stressed out than we wanted to be.
In contrast, our second mortgage with the local lender was a BREEZE, even though by that time I was self-employed (with all the stuff that involves) and we were getting a jumbo loan. And our agent was able to check in with his friend at the lender and keep us updated. Of course, our loan is now with a third party (and has been sold TWICE since we closed), but having that local connection during underwriting and at closing was so nice, particularly since (like you) we were moving cross-country and managing a lot of the process from 2000 miles away.
So. I love USAA a lot, but in the end I was glad we ended up with a local lender.
posted by devinemissk at 7:31 PM on February 13, 2020 [1 favorite]
In contrast, our second mortgage with the local lender was a BREEZE, even though by that time I was self-employed (with all the stuff that involves) and we were getting a jumbo loan. And our agent was able to check in with his friend at the lender and keep us updated. Of course, our loan is now with a third party (and has been sold TWICE since we closed), but having that local connection during underwriting and at closing was so nice, particularly since (like you) we were moving cross-country and managing a lot of the process from 2000 miles away.
So. I love USAA a lot, but in the end I was glad we ended up with a local lender.
posted by devinemissk at 7:31 PM on February 13, 2020 [1 favorite]
If you are getting quotes from multiple lenders, also try the local credit union.
posted by metahawk at 7:38 PM on February 13, 2020 [1 favorite]
posted by metahawk at 7:38 PM on February 13, 2020 [1 favorite]
After a 3 mins google search, looks like USAA sells their loans, so there a chance your loan will be serviced by the same lender no mater if you go local or with USAA.
posted by sideshow at 8:43 PM on February 13, 2020
posted by sideshow at 8:43 PM on February 13, 2020
I am a fan of USAA banking, so we applied with them for a loan when we bought our second house. So far their service has been better than the broker's recommended local lender that we used previously. Our rate was also lower. Finally, the lender sold our first mortgage to another company almost immediately, but so far after two years USAA has still held on to the mortgage. It makes it easy to pay the bill since banking and mortgage are all on one webpage. I would recommend USAA for a mortgage based on personal experience. Good luck with your new house!
posted by seasparrow at 6:25 AM on February 14, 2020
posted by seasparrow at 6:25 AM on February 14, 2020
Response by poster: Thanks for the feedback everyone. Guess I've got more research to do. Picking a real estate agent from a thousand miles away...sounds super fun.
posted by Shutter at 8:39 AM on February 16, 2020
posted by Shutter at 8:39 AM on February 16, 2020
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