Big Banks vs. Boutique Mortgage Lenders…

Ok, I get it.  You bank at Bank of America, have about 3 accounts there and would like to get your mortgage there too.  Maybe you have your whole life savings there, and as a loyal customer they are going to offer you a special rate.  Maybe you don’t bank there, but they have a special offer where if you move $50k into one of their premier accounts, they will drop their pants on the mortgage rate (when this happens, no small lender will be able to compete rate-wise).  But you’ve heard and read horror stories (all true) about how awful these banks can be, and buyers ended up losing houses, or worse down payments, or had to drop a lot of cash on rate lock extensions because the bank couldn’t get their act together.  Your realtor is pushing a small lender they know really well and urging you to steer clear of these infamous banks.  You on the other hand feel more comfortable with the tried and true.  So here’s the skinny on that…  Big banks get a bad rap in the home buying world because mortgages are not really their main focus.  Mortgages are the necessary evil, the freckled bastard stepchild division that doesn’t get a whole lot of TLC from the bank.  Why?   Because it’s not their money maker.  Because they drop their pants too much on interest rates for it ever to really be that profitable.  Their mortgage division is useful mainly as bait to lure you to move your savings accounts over, which is where they really make their profit.  Don’t get me wrong, I’m not saying it’s a bad thing to take advantage of.  But there is a right way and a wrong way to do it.  You really have to be smart about it, and here’s how to do it:

1. Identify a qualified, savvy, motivated, ambitious and, above all, LOCAL mover/shaker at this big bank.   They do exist, but you have to do some research.  Start asking colleagues if they have recommendations, or ask your agent.  Chances are, they’ve done enough transactions involving these banks to know of at least one or two reps that can get the job done.  I know of a handful of loan officers at each big bank that I am confident can get the job done as well as any small lender.  But the challenge is that, unlike a smaller boutique company, even though you find a local rep, those who process and underwrite loans for these large banks are often spread out all over the country, often in different time zones, and they are not too invested in your loan closing.  So in order to utilize a larger bank for your loan process, you will need to identify a superstar loan officer that is pushy on your behalf, and knows how to get sh*t DONE.  Fortunately, they do exist.
2. Do not, under ANY circumstance, just call the 888-loan number that the dude at your local Chase branch gives you. This is the #1 mistake home buyers make, and is what single handedly sets the stage for colossal failure.  This is where you will be paired with a glorified tele-marketer in Dumbledorf, NE who gets paid bi-weekly independently of your loan closing, doesn’t make commission, and has no real incentive to pick up the phone twice when you call. Indeed, you will not likely hear from him again once he’s passed your documentation onto the loan processor, who is likely located on the other end of the continent.  You can imagine the trouble that can ensue…

So the take away?  Don’t ever ever ever ever ever ever ever call that 888 or 800 number and allow yourself to be randomly assigned to Mortgage Joe at Big Bank.  ALWAYS get a referral, and vet the loan officer.  Have a conversation, quiz them on their industry knowledge, experience, problem solving ability, observe how promptly they return your calls,  etc.  Above all, make sure they are HUNGRY for your business.  The hungrier they are, the more likely they will bring the deal to the closing table as swiftly as possible.