Is it always better to have a local lender?

Question

Hi everyone!

My wife and I live in Dallas, Texas and we are new investors and new to BiggerPockets! We have been reading books/forum posts, attending webinars and listening to podcasts as much as possible! Just trying to absorb as much as we can! Definitely appreciative to this community and all the amazing content!

We are currently finding a lender and we were wondering if anyone has used a lender that is not from the same state that they are planning to invest in? If we can get better rate/terms from someone that isn't local, then we should work with them? Or is it preferable if the lender is from the same state?

Thank you!

Stephanie P. · Answer

@Isaac C.

The real answer is it depends on the loan product.  For a construction loan, most lenders have a specific footprint of states they lend in.  If it's a local bank, they lend local.  For an investor loan, national is okay.  The loans are originated and then sold to be serviced for the most part anyway.  The big deal, as some have discussed, is that you find a loan originator that communicates throughout the process (and it is a process), lets you know if something is going sideways and has the experience to either fix the issue or find a way through it.

Local doesn't mean they communicate better or can close on time; there are plenty of buffoons that are local to all of us.:)

Stephanie

Brandon Sturgill · Answer

Perfect...thanks for the info @Isaac C.

Best of luck

Isaac C. · Answer

@Brandon Sturgill

Hi Brandon, yeah the physician loans typically require zero to low down payments up to a certain amount and usually have no PMIs. They will also understand the higher debt to income ratio due to school loans. I'm just comparing and researching as many of the options as I can before making the move

David M. · Answer

@Brandon Sturgill

Yes, it is interesting there is a special loan product for physicians.  Has to do something with their generally high income and potentially high school loans as I vaguely recall..  Not a physician and don't run into it much.

Brandon Sturgill · Answer

@Isaac C. I'd be curious the difference in the product...you're saying there is a special loan product only for physician's?

to your question, no...it makes zero difference where your lender is located if they are in the top 1% of lenders...

What type of product are you looking for?...typically lenders will have a portfolio of products if they are talented...conventional is conventional, but investment-specific loans can vary widely.

Dmitriy Fomichenko · Answer

You are in a good company Isaac!

Isaac C. · Answer

Thank you everyone for your honest feedback and responses! The reason I am considering some OOS lenders is because when I was looking into Physician loans, I was connected to lenders that were all out of state. Perhaps physician loans are not as widely available or I just haven't done enough digging in my local area yet. I will continue to read and research, but I don't know if it happens to anyone else but I feel like the more I read, the more things come up that I don't know about. It's like going through infinite rabbit holes haha.

Lucia Rushton · Answer

@Isaac C. I 100% encourage our clients to use local lenders. Ok so many levels. But primarily they communicate, they can close on time, they can get appraisals complete on time.

The times we’ve had out of state lenders - they have never been able to close on time. They change the goal posts mid-steam and are very hard to get a hold of.

The questions are- how’s your credit scores? How much cash will you be putting down ? How long will you hold the property ? These are the types of questions and answers that will make or break your loan - not whether they are local or online or OOS ( in my opinion).

Julio Gonzalez · Answer

Hi Isaac, welcome to the community! There is a great group of members on here to connect with. Hope you find what you're looking for here!

David M. · Answer

@Isaac C.

Unless you are doing something "complicated," you don't need a local lender.  As with most anything, you are looking for an experienced loan officer that you get along with and will spend the time to work with you.  The best rates come mainly from the company they work for and their associated programs/products.  So, for example its been for a while that deposit banks really only care about doing "easy" loans so their good rates are only available to customers with very good to excellent credit and have solid w2 jobs.  Every since the last depression, mortgage lenders have taken over and the deposit banks are only originating something like a third of what they used I believe is the statistic.

As far as loan products, yes your "average" lender may not do well for you if you want a new construction loan...  Usually some sort of local/regional/state bank or credit union will give you a rate and terms.  Usually, loan officers can lend across the country.  For example, my lender can originate loans in 49 States, and the last state is missing because her company does not work there...

Good luck.

Is it always better to have a local lender?

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