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The Advantage of Using Your Agent’s Lender

It’s common practice for real estate agents to offer recommendations for a variety of services, big and small. A good mortgage lender is one of them. And before you start wondering, it’s not because they get some kind of kickback for the referral – in fact, that’s prohibited by the Real Estate Settlement Procedures Act (RESPA). There’s actually a very good reason for a real estate agent to recommend a reputable mortgage lender, and it benefits the prospective homeowner, too. Here’s the advantage of using your agent’s lender.


First Things First

The language is clear – RESPA prohibits anyone from enjoying any kind of payment or compensation as thanks for a referral on a federal mortgage loan. In the world of mortgage loans, there are conventional loans, FHA loans, and VA loans. Essentially, RESPA applies every mortgage loan you can get from a lender.

If that’s the case, what’s the deal with these referrals? There may not be a financial reward for a realtor to recommend a specific lender, but there is incentive all the same. There are a lot of potholes on the road to a new home purchase, and one of the biggest relates to financing. It’s a piece of the puzzle that requires diligence, timeliness, organization, and experience. And while there may be endless options when it comes to your choice of lender, that doesn’t mean they’re all equal. Any real estate agent closing steady business has likely been through enough lenders to know which ones really deliver. That means a referral to a specific lender is born of direct, personal experience. And that’s saying something. After all, your agent’s goal is the same as yours – getting you into that beautiful new home as quickly and seamlessly as possible. That’s why they’ll do whatever they can to make the process as straightforward and stress-free as possible.

There’s an incentive on the lender side, too. To ensure agents keep sending these kinds of referrals, a lender must truly exceed expectations – every time.

Nothing to Lose

At the very least, it’s worth speaking to your agent’s recommended lender. Maybe you’re feeling tempted by unbelievably low rates you found online, or you have a sense of loyalty to the local bank where your accounts have been for years. You may ultimately decide to move forward with a lender of your own choosing, but before you do, remember this. The lender’s most important job is simply to process your loan efficiently, without mistakes, and in time. That’s it. So ask yourself whether you like the idea of working with a local lender who comes highly recommended by the very person you’re trusting to help you find that dream home. After all, there are advantages to these kinds of personal recommendations.

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