It's okay to look online to find the best rate quotes when shopping for a mortgage. Chances are, you would find a lender that isn't local you area. Is that a problem? It should be fine as long as the lender is familiar to mortgage specific to your area.
To ensure a successful mortgage experience given this situation, here are 4 local factors to consider that could highly affect your mortgage process according to Zillow:
Local rate quotes
Find out if you are getting the best rate from a local lender by checking rates in your specific area. You can do that online by entering your purchase price, down payment, and credit score range, and most importantly, your ZIP code. This is the safest you can screen rates without having too many lenders run your credit.
Communication with local real estate agents
Local real estate agents should have knowledge about local lenders and this could help when you write offers to buy home. Given that real estate is a localized industry, sellers' agents are warning their clients about considering offers financed by an out-of-area lender.
Local settlement procedures and fees
Every local market has its own settlement procedures and associated vendors. Like in California, only a single escrow company is required to deal with a financed real estate transaction. Unlike in New York where there are separate attorneys representing the buyer and the seller.
The rate is also different for every city and state when it comes to property-related taxes and local customs on how these taxes are settled by both buyer and seller. It's the same circumstance for title, escrow and attorney fees.
If your lender is a non-local, make sure that they know their way around these local processes and fees or your transaction could face delays or fall apart entirely.
Local property knowledge
When it comes to loans, there are two bases: borrowers and properties. Every lender can do pre-approval, but you can only be approved as a borrower in this phase. For the loan to be finalized, a thorough process review of title report, contractor and pest inspections, property condition and value would first have to be done by the lender in an ordered appraisal report.
With a local lender, there's no problem having the appropriate appraisal network in your area, but with a non-local lender, there are some off-market sales that they may miss and this could result to an appraisal that is lower than expected.
