We all want life to be simple, especially when it comes to our finances. So it’s no surprise that many people, when they need a home loan, turn to the bank where they already have a checking or savings account. However, Redfin data shows that lesser known lenders are often a better choice for homebuyers.
Using client feedback from Redfin reviews site Open Book, we analyzed 4,000 customer reviews of 1,900 lenders from the last 12 months and calculated the Net Promoter Score (NPS), a popular customer-service metric, for each lender and lender type.
We grouped the ratings into three buckets: Redfin-recommended loan officers, loan officers at three of the largest retail banks, and “everyone else.” “Everyone else” consists of loan officers at smaller regional banks as well as dedicated mortgage lenders who don’t offer traditional banking services. Here’s how they stacked up:
Redfin-recommended lenders ranked highest with a Net Promoter Score of 77%. This shouldn’t be a surprise; Redfin-recommended loan officers are hand-picked by Redfin Agents for demonstrating a consistent commitment to great service. But we were surprised by the magnitude of the difference between our recommended lenders, the “Big 3” banks, and everyone else.
Now, to be fair, some loan officers who work at big banks are great. In fact, out of 50 Redfin-recommended lenders, seven work for one of the “Big 3.” These seven loan officers achieved a combined Net Promoter Score of 75%.
To look at the data another way, we compared the really dissatisfied people who gave their lender three stars or less. Redfin-recommended lenders received three stars or lower on just one in 20 reviews, while big banks received three stars or lower from one out of every five customers. In other words, Redfin clients were four times as likely to have a negative experience with one of the “Big 3” than with a Redfin-recommended lender.
Your lender can affect your negotiating power
In today’s competitive market, your lender’s ability to deliver funds on or before the closing date can give you a leg up against the competition. So we also compared closing times for Redfin-recommended lenders vs. big bank lenders and found that Redfin-recommended lenders closed five to 10 days faster, on average. Closing timelines can make all the difference when a seller compares one offer to another.
Mark Biggins, a Redfin Agent in Berkeley, CA, recommends Dianne Crosby to all of his clients because of her stellar reputation for closing on time. When Mark recently presented a client’s offer in person, along with a pre-approval letter from Dianne, the listing agent turned to the seller and said, “there’s no question about financing on this offer.”
Dianne and her team rally to help their clients win and get the most favorable terms:
Dianne helped us make our offer terms as strong as possible from the lending side. The seller was definitely persuaded by the very short closing period and because of that, we won the bid! Dianne and her assistant, Anna, then helped make the rest of the transaction go so smoothly. We could have closed in 17 days instead of the offered 20!
Redfin Agents and Open Book will help you find a lender you can trust
After picking your real estate agent, your lender is the most important person on your team and most likely to affect your stress level after your offer has been accepted. Since most Redfin Agents close three or four deals a month, our recommendations come from vast experience and are backed by reviews from past customers.
While most Redfin-recommended loan officers work for smaller, local lenders, there are excellent loan officers at every firm, and the individual loan officer can make all the difference. A big bank could be the right choice for you if you can get a reliable recommendation for a specific loan officer to work with. You should ask your lender how long it took for her last five purchase loans to close, and make sure the timeframes fit your situation.
If you have questions about financing your home, any of Redfin’s recommended loan officers would love to help out. And don’t worry – they don’t pay us a dime. We aren’t even allowed to accept Christmas gift baskets from lenders.
Have you had a recent experience with a lender, great or otherwise? Do you have some advice of your own? Drop a comment below.