The Danger of Internet Lenders in Arizona

As a buyer in Arizona you are free to choose any lender with whom you would like to work. You can choose a local company, a national bank or an internet lender. The choice of your financing entity is entirely up to you. However, it is not a choice you should make lightly. Any lender you choose to work with must work in conjunction with you, your real estate agent and your escrow/title company.

In Arizona our standard real estate purchase contract requires you as the borrower to tender an LSR (Loan Status Report) with your offer. Normally the LSR is completed by your lender and states the type of loan you are obtaining and verifies for the seller the status of your qualifying for the loan with which you plan on purchasing the property.  If you choose an internet lender you should make certain that they are willing to complete an Arizona Loan Status Report (LSR) that you can attach to your offer. While it is true that the lender does not have to sign the LSR and you can simply indicate as the borrower that you will obtain financing within 5 days of the offer’s acceptance, most listing agents will discount the seriousness of an offer not tendered with a fully completed LSR. That means that if you work with a lender who refuses to complete this form for you and your real estate professional that you may have difficulty in getting your offer accepted.

This is just one of the many reasons why you should choose your lender carefully and work with someone you know and trust. We would recommend that you get the input of your real estate professional regarding any lender that you are considering using in the transaction and get your agent’s input as to how that might affect you in the real estate transaction.

The standard AAR Residential Purchase Contract also obligates you as the buyer to provide periodic Loan Status Updates (LSU’s) to the seller and/or listing agent. If you work with a lender who is not willing to complete this form it is possible that you could be forced as the buyer into the cancellation of your contract and risk the possible loss of your earnest money deposit.

Choosing a lender is serious business. Work with lenders that you know, trust and can rely on in any purchase of real estate.

Course Creators is a national education company. We receive no referral fees and have nothing to gain from whichever lender you choose to work with. This information is provided only for the purpose of assisting you in researching your potential lender in a real estate transaction.


Questions to Ask Any Lender

The process of choosing a lender is an important step in buying your home. Buying a home is the single biggest investment you are ever likely to make and your choice of professionals to assist you in that process requires some effort on your part. Not just choosing the lender who offers you the best interest rate over the phone. Here are some fundamental questions you may want to ask of any lender before you ask them to help you with the purchase of your home.

1. Can the lender be found in the National Mortgage Licensing System database and can the lender be found in the Arizona Department of Financial Institutions database?

Lenders are regulated and tracked nationally through a system known as NMLS. All loan officers are required as of January 1, 2010 to be registered within the system. In the State of Arizona, loan officers and their brokerages are also regulated by the Arizona Department of Financial Institutions. You can look up licensees in the AZDFI database.

2. Will the lender provide a list of past clients as references from whom you can get a testimonial?

You should ask the lender for references of past clients. Reputable lenders will have a reference list available. You should call these past clients and hear from them first hand what their experience was with the lender. Ask if their questions were answered. Ask if they were treated fairly. Ask them if the loan process was well explained.

3. Can the lender provide the names of past real estate agents with whom they worked?

Most lenders work closely with real estate professionals in funding real estate transactions. Find out what real estate agents think of the lender’s handling of the loan process. If you are having any difficulty locating the agent, you can find the contact information for Arizona real estate professionals on the Arizona Department of Real Estate’s website under the information for Consumers.

4, Is the lender a member of the National Association of Mortgage Brokers (NAMB) and the Arizona Association of Mortgage Brokers?

Both of these organizations are trade associations to which mortgage brokers and loan officers belong. You can a list of NAMB members on the NAMB website. The website for the Arizona Association of Mortgage Brokers also maintains a list of members in good standing.

5. Is the lender a member of the Southern Arizona Mortgage Lenders Association (SAMLA)?

Another trade organization is SAMLA. You can find a llist of their members on their website.

6. Can you find the lender on Linkedin and have you read their recommendations?

Linkedin is site for business professionals to network. You can establish a linkedin account for free. Under the profile section on the site, it is easy for Linkedin users to collect recommendations from people they have worked with. Go to Linkedin, search their name and read what others have to say about working with a particular lender or loan officer.

7. Have you searched the loan officer and their company on Google?

It’s amazing the things you will discover by googling the names of individuals. Just go to Google and search the name.

8. Have you looked for the lender on facebook?

Many lenders and real estate professionals are currently maintaining facebook accounts. You can see the dialogue that they are having with their clients and customers and even ask them preliminary questions about representing you in a real estate transaction.

Course Creators is an national education company. We receive no referral fees and have nothing to gain from whichever lender you choose to work with. This information is provided only for the purpose of assisting you in researching your potential lender in a real estate transaction.

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