Some clients of mine have moved away. They closed on their home last week after a traumatic few weeks of house hunting. The story I am about to tell is real. The names will not be mentioned, but the facts are the facts. Take them for what they are worth.
They bought a very expensive home, the day before closing they learned the out of state mortgage broker neglected to tell them (probably because he didn't know) there was a "LUXURY TRANSFER TAX" of 1% and several thousand dollars of fees he forgot to list in the good faith estimate.
1% doesn't sound like much, but in this instance it all added up to $26,000! OUCH!
At the last minute they were calling family for a quick loan. Yes, they had the funds, but just couldn't access them by the next day.
Everyone makes mistakes, but why is it that mortgage brokers seems to make them more often?
Why blame it on the out of state/area mortgage broker? Well had they used a LOCAL mortgage banker, that person would have been more likely to be familiar with the local custom (the 1% tax was a STATE law!). It would have come up much sooner than the day before closing.
Using an out of area lender is always risky. Mortgage brokers often are licensed to do business in many states. More states than they could ever possibly know all the rules and regs. To most, it's a crap shoot, they win some they lose some. Mortgage brokers have NO VESTED interest in the consumer or getting the job done right. They take applications and send them off to investors and mortgage BANKERS to process. This means they do not control the process, even though they tell you they do. (that's another blog)
Why do I say that? Well time and time again mortgage brokers have ignored important dates in the Colorado approved contract. Dates that if missed could possibly mean the buyer would lose every penny of their hard earned earnest money.
The person held responsible is the real estate agent. The agent is required by law to represent the best interest of the buyer so he does. But when it comes to the mortgage broker who is responsible for meeting the dates and delivering the money, they have no fiduciary to the buyer. In fact many mortgage brokers refuse to even speak to the buyer's agent.
So the agent is left in the dark, writing extension after extension to be sure the buyer is covered.
The best strategy for a consumer is to use a tried and true mortgage banker who lives and works in the area. Don't rely on some friendly voice in a faraway state to handle the transaction. Go with a professional who knows what they are doing and can advise you from the beginning.
As my daughter quipped, "You don't want to be a casualty at their first rodeo!"