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Inside Gig Harbor Real Estate: The importance of choosing the right mortgage lender

Paige Schulte

Paige Schulte is founder of the Neighborhood Experts Real Estate office in Gig Harbor. In 2020, she was recognized by the Wall Street Journal for her use of virtual tours and digital media for buyers during the height of the Coronavirus pandemic. She was named 2022 Finest Realtor in Gig Harbor by Gig Harbor Living Local. Schulte also sits on the board of her foundation ChelseaPaige Foundation that donates funds back to non-profit organizations in the greater Gig Harbor area.

“Hey mortgage lender, look at me, listen to me, you are more than just a rate!”

I say that as a joke, but I know they are feeling that hard right now. Buyers are so sensitive to the rates, as they should be. It is more expensive than ever to purchase a home right now.

I know, I know, some of you can remember when it was 18%. But houses also cost $50,000. Now they are $575,000 for 1,300 square feet, like one that just hit the market in Gig Harbor North on March 8. Yet rates are sitting right about 7% for 20% down/conventional 30-year fixed with a big bank.

I list homes for sale and I work with buyers. Both experiences are vital to understanding the strength of the market for my clients.

Local lenders

When I talk to my buyers they often want to know what “step one” is. They have already done it: Finding a local real estate professional to guide them to home ownership.

Step 2 is getting a local lender and getting underwritten so they can be in the strongest negotiating position when they find the home they love. So, I give them some options based on their experience level and their economic portfolio.

Not all lenders, banks and credit unions are created equal. Listing agents representing sellers who see those pre-approval letters definitely know that some of those banks and lenders can be difficult to work with or close on time. In a multiple offer situation when all offers are close, those can be deal-breakers.

I like to prepare my buyers for what they expect depending on who they choose. Is the priority really good service or the best fees and rate? Sometimes one of those is sacrificed depending on the lending institution. It’s good to be prepared going into it.

An experienced agent can help guide you through your choices. Your agent may also have contacts within that company who defy the stereotype, helping you get what you want AND helping the transaction move more smoothly. This helps me vouch for you when I submit the offer with a less popular bank among listing agents.

Megan Higgs, a lender with HomeTown Mortgage, goes over numbers with a buyer.

Do they work weekends?

There are still a couple lenders that answer calls on the weekends. You want that as you compete in a low-inventory market.

Most of the big institutions do not work weekends. If you are someone who likes instant response, prepare yourself for the 9-to-5 time clock and no response on the weekends. Trust me when I say it’s brutal when you need them and they aren’t there.

If you are like most, you are shopping rates among a number of outfits. You’re probably looking at the difference between costs for discount points for a lower rate, or another program like a 2-1 buy down. A local lender at a smaller company will be way more hands-on for you and easier to reach nights and weekends to strategize on every home.

The service they provide is incredible. They are your ride-or-die weekend warriors and are often less rigid than big banks. They dive deeper into files and are more personal than the larger institutional corporations.

For most first-time homebuyers, a local smaller mortgage lender is your superhero. They are your money guru walking hand in hand with you to navigate your debt-to-income ratio. They will help you gather all your items, walk you through every line item to understand what it all means and be there for you when you forget after running numbers on the eighth home.

Local faves

Locals I love are HomeTown lender Megan Higgs, Movement Mortgage lender Ryan Johannes and Cornerstone lender Petros Christophilis. All have incredible service, are well-known and are sensitive to rates. They are all well versed in VA, FHA, 15- and 30-year, jumbo and other creative programs to help with affordability in rates depending on length of time you’ll own the home or current job situation with raises and promotion statuses.

I always caution my clients when they bring me an online lender. Those mass-produced letters have not taken a deep dive into your history to vet your financial status. If you turn that letter in with your offer, it will hold little weight with a listing agent. Skip the online options, talk to your agent and find a competitive option locally. I promise they are out there.

Pro Tip

I talked about getting fully underwritten above. That’s our team’s secret weapon. We are spilling the beans because it’s that important. And since we sell a lot of homes, we’d like all the buyers that come our way to be underwritten too. So now you know. What does that mean?

Fully underwritten means that the bank has looked at your financial information and verified that it is acceptable to use for lending up to your purchase price. All you would need then is a house and an appraisal. Typically this would take about 15 days, and the appraisal would need about 15 days. So you just cut your time in half, making you FULLY approved for a loan (sellers LOVE that) and a very fast close.

A typical contract when you buy a home is 30 days. If you were FULLY underwritten before you made the offer you could cut the contract time down to 15 days and offer the seller a FAST close. This is a great offer for many homes that are vacant or a seller that might need funds faster or if you are competing with a cash buyer.

You and the seller could also be confident in knowing your financing was solid and you would not have to worry about not being approved for the loan, evening the playing field with cash buyers.

Not all banks will underwrite you upfront. Not every bank likes to do all the leg work up front. It takes time and therefore money, and sometimes buyers get squirrelly and switch lenders or never buy. Then they did all that work for nothing. All the all star lenders I know do it, because they know it serves their buyer’s best interests in securing a home at the best price.

Being fully underwritten saves you money, period. It take about 10 days to get the process done if you send in the documents in a timely fashion.

When you build your team of all-stars, a local lender and local agent will be the backbone of helping you find success through challenging markets. Your lender needs to be more than a rate. Service matters.

Market

If you want a home in the current environment you have a few elements at play:

Low Inventory

Buy the home you love when you see it. The low inventory is NOT going away.

Interest Rates

The rates will continue to fluctuate until the economy has stabilized. That could be a long time. Work with a lender that can get you into a program that works for you now. Then refinance in the next 2-4 years; 90% of homeowners re-finance. Just talk to the 90% that did when rates were 2-3% and are never moving (see the note above about low inventory).

*If rates change in your favor while you are in contract you can call your lender to ask for a one time float down and capture that lower rate! As your agent we try to catch those opportunities as well when we hear breaking news like that.

Local agent Falynn Auston of Neighborhood Experts recently took advantage of that herself on her own transaction in February floating from 6.125% to 5.625% on an investment property she purchased. She was paired up with local lender Megan Higgs of Hometown Lenders. Eeek, so good!

Appreciation

Home values will continue to increase over the long term. In addition the rental market is expected to increase 6% in the Pierce County and King County regions this year according to Matthew Gardner, Windermere Chief Economist.

If you need a house, they are few and far between right now: 93 in Gig Harbor and only 27 on the Key Peninsula. If you love it, snap it up.

You cannot lock in an interest rate a home without a purchase and sale agreement. You need a great lender relationship already started to be prepared when you see your dream home hit the market. The most prepared buyer wins. If you are fully underwritten with a communicative local lender, that will strengthen your offer and give you an extra boost with the seller.

Good luck out there as we head into the spring market.