Lenders out of state: does it matter? what are the pros/cons?

Question

This may seem like a naive/juvenile question to someone of experience, and I'm new so here it goes.

What positive/negative sides are there to having a lender who isn't local to the area I'm looking to purchase?Does it matter at all??

Thanks in advance!

Bradley Buxton · Answer

@Erin Attwood

Some local lenders know the market better and might give you more favorable terms. There is also the local knowledge of a market like here in Lake Tahoe where lending can be trickier so an offer with a local lender might get chosen because they have a reputation to get a deal done vs a national lender that can have more red tape and a slower process.

Stuart Udis · Answer

If this is a construction loan, a lender with  local knowledge and expertise should be valued above all else. Issues arise during construction, many of which are minor in nature but those with local knowledge and expertise are better positioned to understand this keep your projects moving towards the finish line.

Savannah Holzer · Answer

Hey Erin! A local lender may have a better understanding of the market conditions, zoning laws, etc. in your area, which can be a positive advantage. On the other hand, non-local lenders may offer more competitive terms or flexibility since they're not tied to specific regional trends. It really doesn't always matter if the lender isn't local, as long as they're reliable, knowledgeable, and responsive to you.

Jay Thomas · Answer

Hey Erin,

Great question, and definitely not naive!The main thing with a non-local lender is they might not fully understand the specific market dynamics of your area, which can sometimes affect appraisals or timelines.However, they might be able to provide lower rates or better terms than local lenders so it is worth looking into. But be sure you find one that is comfortable working in the details of your target market.

Nicholas L. · Answer

@Erin Attwood

since this is posted under house hacking, i'm assuming you're looking to house hack?

there are national lenders everyone's heard of (Chase, BoA, etc.) and local lenders (regional, local, credit unions, etc.)

call a bunch of both.  ask them what's available.  see who you like.  tell them you're not ready to have your credit pulled but you want to know what options are available for you.

hope this helps

Remington Lyman · Answer

There are both advantages and disadvantages to using an out-of-state lender. Much depends on the type of property you are purchasing and the kind of loan you are seeking. For instance, if you are buying a commercial building, it may be more beneficial to work with a community bank. If you are obtaining a hard money loan, the lender's familiarity with the market is what matters most. With a conventional mortgage, the location of the lender is less significant.

In my opinion, having a local lender can be advantageous, as it adds another knowledgeable resource to your team regarding the area. However, if you are an investor involved in multiple cities, you might prefer a lender who is licensed in various locations.

Jay Hurst · Answer

What type of loan are you looking for?  For a rehab/hard money type loan? or a conventional/DSCR type 30 year fixed?

Julia Lyrberg · Answer

Many out-of-area lenders can still offer competitive terms and expertise, especially if they specialize in the type of loan you need. As long as they’re familiar with the market you're buying in, it usually doesn't matter too much where the lender is located. Just make sure they have experience in the area and can meet your needs!

Ian Walsh · Answer

It can matter for sure.  Out of state and institutionally funded can be tough to close at times.  Privately funded and local tend to be easier .

Lenders out of state: does it matter? what are the pros/cons?

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