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5 Drawbacks Of Using An Out Of State Mortgage Lender
Because all types of lenders essentially sell the same product which is money, borrowing out of state mortgages have become more and more common.
It used to be that when property buyers purchase a house, or when a homeowner decide to refinance, they would walk right into the local bank to inquire or call up a local mortgage broker to ask about the latest promotional rates.
But these days, we can easily scan the internet and mobile apps to research for home loans all over the place.
That’s why it no longer raises an eyebrow when someone from New York obtains a loan from a place like Los Angeles or Seattle.
After all, your out of state home loan would probably be packaged to be resold on the secondary market right after closing.
So it really don’t matter whether your financing is sourced from in-state or out of state.
While there are definitely benefits of accepting an out of state mortgage loan, especially when it has terms that are way more attractive that what you find locally, there are some considerations that must be contemplated.
Probably the most important thing to investigate is whether the out of state mortgage lender is licensed to conduct business in your state.
While we are pretty much used to having all the big lenders operate in all the big cities, this cannot be said of smaller lenders.
When you discover home loan that undercuts the regular mortgage rates, the odds are very high that they are offered by a smaller lender.
You could of course, check with the lender.
Otherwise, check out the Nationwide Multi-State Licensing System (NMLS) to make sure.
Being licensed to operate in a particular state is one thing. Being competent in executing it is another.
Different states have different rules and practices of closing.
You can’t expect a lender who focuses all it’s time and efforts in the Atlanta market and be an expert in Detroit as well.
So ideally, you’d want a lender who is experienced in closing cases in your particular state.
Mistakes can cause delays, additional costs, and even problems that only arise in future.
It fact, it can be dangerous to engage professionals who are not proficient in dealing with your local regulations.
Legal matters are never something to play with.
3) Time zone
A difference in time zone can cause major problems especially when you are short of time.
So ensure that you keep this factor in mind when preparing for closing.
It is preferable to have an out of state lender who is a few hours behind you rather than ahead of you.
This is so that they are usually still open for business during your local time.
You don’t want to find them closed when you need them most at the later part of the day.
Mortgage fraud is surprising still very much alive and kicking in this modern day and age.
If you have never noticed, one of the common attributes of fraudsters is that they are always located across the country from where you are.
And this is considering that you actually have their real addresses.
So be extra careful when dealing with lenders located outside your state. And avoid thinking nothing of events that seem too suspicious.
Distance should not be a huge road-block in preventing you from accepting a loan from a lender that is located more than a thousand of mile away.
Courier services are efficient these days. So even documentation that require original hard copies can be promptly delivered on a timely basis.
However, if the lender is a portfolio lenders who holds onto the loans and services accounts themselves, then consider that should problems come up in future where you need to meet up with their representatives, you might have some traveling to do.
There really is no point in paying more than you need to on your home loan.
All lenders sell the same product and service. So if a killer deal is available no matter where it operates from, it makes total sense to take it up.
Just ensure that you have taken the above points into consideration when evaluating an out of state mortgage loan.