As a specialist in helping relocating buyers find homes in the Philadelphia area, I have many clients who obtain pre-approvals from their banks or even lenders they have used in the places they will be moving from. While that decision doesn’t necessarily spell disaster, there are some potential pitfalls that I see way too often. Here are some of the risks you take if you don’t work with a local lender with experience helping relocating buyers:
Inaccurate closing cost estimates
PA closing costs are very high and many lenders just estimate based on averages.They often provide estimates which are inaccurate and too low. Imagine how unhappy people are to discover that they need much more cash than they had thought in order to close. Customs differ from region to region. For example, in PA, the buyer and seller each pay transfer tax. I have had non-local lenders ascribe all the transfer tax (and often still the wrong amount) to sellers. My buyers don’t enjoy it when I have to correct that mistake either. National banks which are often more constrained by lots of immovable rules and regulations than mortgage brokers are the worst offenders.
Banker’s hours don’t cut it
While a local lender doesn’t guarantee better customer service than a national bank, it usually does. Be sure that you have a cell number for your lender and that he or she is responsive outside of banking hours. Most real estate transactions occur outside of traditional work hours of 9-5 because buyers and sellers are usually working then and not available to negotiate in the middle of the work day. Conversations between agents and buyers and sellers occur much more often at night and on weekends. You need to be able to reach your lender when you have a question or require an updated pre-approval immediately.
Lack of experience specific to relating to job move
In the Philadelphia area, we have a lot of colleges and universities and people are often leaving one academic post to take a new one here. Local lenders understand some of the idiosyncracies of these situations. Often, people can remain employed remotely by an institution and, conversely, have a delay, based on the academic year, before they can start their next job. There are strict Fannie Mae/Freddie Mac rules about whether they can count income from an out of state university toward the income to debt ratio as well as rules that apply to counting income from a position that doesn’t start for more than 90 days. I had a client who was assured by a national bank that she would qualify for a mortgage even after my local lender, who works with my relo clients all the time, told me underwriting wouldn’t be able to count her upcoming job income. She listened to the bank, got a preapproval through them, and then, lo and behold. less than two weeks before settlement, they told her she wouldn’t qualify. Fortunately for her, my rock star lender was able to swoop in, pick up the pieces and actually settle on time.
Incorrect assumptions that the real estate landscape looks the same everywhere
One example of this mistake is when, just last week, a client of mine who is moving here from Arizona, but is not yet ready to sell his home there, told me his bank there said his interest rate would be higher than normal because the lender had to categorize the PA house as a vacation home. My guess (as I don’t know) is that, in Arizona, it’s so common for a home there to be a vacation home, that the increase in mortgage rates for second homes is the norm there. I checked with my local lender and he scoffed and said he makes loans all the time to people moving from other areas who are not selling their current homes and he is able to offer them “regular” rates.
These are just a few of the obstacles you want to avoid when you need to get a mortgage to buy a home in another area. Moving and especially relocating to someplace new where you may not have a network is already stressful. And buying a house anywhere, any time is, too. You don’t need to introduce any unnecessary ways for things to go wrong. Do yourself a favor and talk to a local lender who has experience with relocating buyers wherever you are going.
If you are relocating to the Philadelphia/Main Line area, please go to my blog page and search for posts using the relocation tag. Contact me to discuss your Philadelphia area relocation! firstname.lastname@example.org/610 308-5973
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