Boston condos for sale: Shopping for a mortgage
Keeping in mind that this is a Boston real estate blog, not a mortgage blog, we have some general advice. That is, shop around, never underestimate the importance of good customer service, and know the difference between using a credit union, a big national bank (or online bank), and a local mortgage lender.
When it comes to the nuts and bolts of your mortgage, the number of options out there is mind-boggling. You may have already received offers or advertising from multiple lenders offering low-interest rates or points. This brings us to piece of advice #1… keep looking!
When it comes to loaning you money, national banks and credit unions have the advantage of being convenient, with multiple branches and people you’re familiar with. Plus, your bank already has your money so transferring funds is easier. However, the customer service at big banks and even local credit unions can be slow, either because they’re too big to care (national or online banks) or because they’re so small (credit unions) they don’t have adequate staff! The last thing you want at your home closing is a snafu because the lender didn’t provide the necessary paperwork. In my experience and in the experience of my co-workers, if a deal does not close on time – 99 times out of 100 it is because the Boston Seaport condo buyer is using a big national bank or a credit union to secure their loan and that bank or credit union is behind (sometimes by weeks). This can create havoc with the Boston condo buyer’s moving plans and the sellers moving out plans, ultimately can cost the home buyer a lot of money in negotiations to keep their home purchase contract from terminating, and in moving/planning costs. To top it all off, these national banks and credit unions may not necessarily have the best rates.
Local Downtown Boston Condo Lenders
As a Boston condo buyers agent, I usually recommend that my clients look for a direct, local lending mortgage company to finance their Boston home. Please feel free to contact us for our immediate recommendations. They typically can offer more loan options than the banks, and they typically provide the best rates and service.
When you talk to any lender about a downtown Boston real estate mortgage, be sure to ask for a breakdown of the total costs for closing on your new home. It should include all third party fees, the appraisal fee, the cost of obtaining a credit report, title insurance, any other costs that will be either due upfront or wrapped into the loan amount. You can use this to easily compare lenders and find the best deal.
Although you’ll want to shop around for the best rate, shop around for the best loan officer for your mortgage, too. They should be someone you enjoy working with because you’ll need to be comfortable asking them questions on the fly. They need to be experts in their field because they’ll be the ones in charge of getting the paperwork done in time for your home to close!
Great loan officers are hiding out at both big banks and small direct lenders, and it takes experience and first-hand knowledge to know who is worth their salt. That’s where the expertise of your real estate agent comes in handy. Just ask and I’ll be happy to recommend lenders that I’ve worked with in Boston for years, where the loan officers put customer service first – just like my Boston condo buyers’ team does
When the state-mandated shutdowns started last March, many Americans sought out loans and chose the credit union over a bank based on the more personal feeling relationship.
It’s not surprising that many downtown Boston real estate buyers have received loans in the past year given record low-interest rates, but research shows that credit unions tend to lend more than commercial banks during times of crisis. That’s because their mission is to support Main Street, unions and the local communities they serve. s.
Between year-end 2019 and Sept. 2020, credit union memberships increased by 3.37 million, or 2.8%, to 125.11 million. Loan portfolios at credit unions rose 6.6% in the 12 months ending Sept. 2020, slightly above last year’s annual rate of 6.5%. By comparison, banks saw a 4.9% growth in loans.
Because credit unions are not-for-profit entities, they return earnings to members through lower loan rates than commercial banks, higher deposit rates, and lower and fewer fees. But that doesn’t mean that credit unions regularly do more business than banks. During “normal” times, banks tend to lend more.
Before the recession in 2008, 24% of all mortgages from banks were subprime compared to about 3% at credit unions. When the crisis hit, banks pulled back a lot more. Van Rijn said he’s seeing a similar pattern playing out now.
Credit unions and banks are similar in that both offer financial services and are insured. While the Federal Deposit Insurance Corporation insures banks, credit unions are insured by the National Credit Union Administration. The key difference is that banks are for-profit institutions owned by shareholders, whereas credit unions are not-for-profit cooperatives controlled by their members. These differences create different priorities and incentives.
Credit unions’ cooperative model can yield some surprising results during crises. Despite the pandemic and recession, credit union asset quality improved during the year. According to CUNA, the credit union delinquency rate fell to 0.54% in September, while net charge-offs dropped to just 0.47%, down from 0.70% and 0.56%, respectively, in 2019. CUNA attributed the results to stimulus payments, loan growth, and credit unions working with members to modify and defer loans, which avoids delinquencies and charge-offs.
Credit unions’ motives and models make them more likely to pop up in low-income and racially or ethnically diverse areas than banks. More than 75% of credit unions are in ethnically and racially diverse areas compared to 70.5% of banks. Similarly, more than 8% of credit unions are in low-income areas, compared to 5.3% of banks, according to data compiled by CUNA.