Dear Home Buying Mortgage Shopper

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Dear Home Buying Mortgage Shopper

Dear Home Buyer,

Thank you for your inquiry. I'd like to clarify what your looking for.

Your letter indicated you want the lowest rate with the lowest cost! Everyone wants the best deal, the best mortgage, the lowest cost. You're shopping for a bargain. I'm sorry to tell you I can't compete.

It's easy and may even be legal to quote you that low rate low, cost loan, but all to often the lowest cost / lowest rate estimates don't close.

You won't know you've been missquoted/missled until just before or at your closing when the real rate and cost will be disclosed, and it's to late to go elsewhere. Do you want to be turned down for the "best rate/cost estimate or to purchase a home of your own at an extremely good rate?

When you as a home buyer mistakenly seek lowest quote thinking it's the best deal by looking at the pre-locked estimates you seldom get the best deal!

Based on the information you've provided I attached three "Good Faith Estimates," and "Truth in Lending" forms, these are all the same loan. The rate I've quoted is available as I type this and can be locked for 30 days, assuring you this rate if you close within the 30 days, it's important to compare rates available for the same lock period. I can provide other rates that can be locked in for 45 or 60 days if needed.

You'll notice you have choices! My fees are not dependent upon your rate I make the same on all 3, but your rate will determine who pays for my services, you or the lender. If you can afford it over a very long term the lowest rate is the best loan! Most people find the lowest cost loan the best for them. Rates are available in 1/8% increments between the two extremes.

You may see a variation of the prepaid items from one lender to another, none of us know for sure what these cost will be! One prepaid item is "prepaid interest" it's legal to show only 1 days cost here, I show 25 days interest so that you'll know you may need this much cash at closing, again no one knows on what day this will close so it's better to be prepared! If you are comparing "Brokers" against "Direct Lenders" you'll see there are more line items with the brokers, be sure to read the total cost be cause it's this cost that's important not how many line items it's divided into. When dealing with brokers you may also notice a line labeled "paid broker outside of closing" this is the Yield Spread Premium, YSP this is the lender paying the broker to lower your cost. This is dependent on the rate you select, bankers make even more on the same rate but are not required to disclose their gross profit. It's your total cost as shown at the bottom that matters! I make the same thing no matter witch option you chose, with or with out YSP.

If you truly seek the" best deal" I suggest that you shop for the best Loan Originator! The only protection you the consumer has is the personal integrity of their loan originator.

Towards that end I have also attached three pages of recent clients, who will gladly speak to you. Please respect their time and note the hours they are available shown under their full name, address, and phone numbers.

If I can be of service, if you truly want to own the house please call me.

Bill

William J Archambault Jr

The Real Estate Investment Institute

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Bill

William J Archambault Jr

The Real Estate Investment Institute

wja@reii.org Cell 832-259-7078, Houston 832-582-8415, Las vegas 702-516-1569

Back Cover One House At A Time

From my past: GRI 1975, FLI 1974, Catalyst from a client 1974 an agent that makes things happen, REII, The Real Estate Investment Institute 1995.

©William J Archambault Jr ©The Real Estate Investment Institute ©REII

Posted by William J Archambault Jr on 06/25/2009 04:21 PM

Comments (50)

consumers, mortgages, rates, points, ysp, yield spread premium, reii, william j archambault jr

Originally posted at: The Real Estate Sage at The Real Estate Investment Institute - REII: Dear Home Buying Mortgage Shopper

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50 Comments on Dear Home Buying Mortgage Shopper

JUN

2009

Bill,

Hang on for a minute here; I'm going to get some popcorn to enjoy with the feature! Great post!

Mike in Tucson

Thanks Mike..

You know most of our readers have never been to the drive in.

Bill

Bill, I am always amazed at the number of people that don't ask for or get a Rate & Point Lock Letter. If you don't have one then there is a good chance that you are not locked in, and in for a surprise at the Closing.

George,

I'll bet your clients don't have to worry!

"The only protection the consumer has is the personal integrity of their loan originator. "

Thanks for letting me repeat myself! I love redundancy!

Bill

Bill - You have some of the more quotable quotes around. "The only protection the consumer has is the personal integrity of their loan originator." As soon as folks understand that, they've been educated far more than others who don't understand just that. The philosophy & truth behind this post must be soaked in by consumers and professionals alike. Shout if from the skies, the seas, the land, and everywhere beyond and in between. Great post, my friend.

Bill, you've pointed out the key ingredient in all business dealings, "integrity." When it's not there; it's consumer beware.

Thanks for the post. I'll have to print it out and use this to supplement my "talk" to buyers on this very subject! There's nothing in our real estate sales contract that allows buyers to walk from the deal or delay closing -- when they find out (at the closing table) that their "low, low rate QUOTE" was only an "estimate" . . . 'cause that's what the mortgage lender will tell them . . . "it was ONLY a good faith ESTIMATE"

I've heard lenders try to tell my clients this . . . see how well-intentioned FEDERAL stuff (when, exactly, were GFE's mandated?) gets twisted by unscrupulous people!!

Good post!

Bill, it has been my good fortune to only work with ethical loan officers. This is a great post on the subject. Thanks,

Sharon

Jason,

Thank you!

I'm nothing if not redundant. I've been using this line for over 30 years. this blog is an edited comment I made on one of Jeff's bloggs almost 3 years ago.

Feel free to marinate your consumers in my quotes, I sell books. :>)

Bill

John,

My Grandfather would have it no other way!

Bill

Carla,

T in L's including the good faith estimate were first incarnated in late 1972. At that time we gave them to the borrower 3 days before the closing, absolute stupidity!

It's not "Reg G" that's the problem it was a noble idea, The problem is HUD! The first rules were 3,000 pages long! That fall I spent 5 days and 4 nights in the Veterans Hall in Battle Creek Michigan with nearly a 1,000 other bankers learning the rules.

Friday afternoon I saw the light, I had an epehany and I inadverntly said out loud that "I could do that"and everyone turned and looked at me, including the Chairmen of the Board and Executive VP of the bank I worked for. Monday morning before opening (We were open 10 to 4, but worked 8:30 to 6:00 sometimes 12:00PM.) the Chairmen and the EXc were in my office they had a gift wraped book for me, "Elwoods Tables"I still have it. They also gave me 2 files that we had to close by Friday. It seems that our computer service took a minimum of 5 days to compute the APR. The first one took me 8 hours, the second 4 hours, they stationed the Chairman's sectary in front of my door and cut me off from the switch board! I did these thing with a slide rule and metalcancal calculator. I got it down to 45 minutes by the 5th or 6th file but I never told them! No one seemed to remember that I had 2 private lines to my office. I got allot of work done and the bank had my lunches catered !

Bill

Sharon,

Thank you.

I believe we are who we associate with! This speaks well of you!

My personal standard Not including "prepaid interest" which I always quote high is to be $50.00 over, It is after all a "GOOD FAITH" estimate, My good faith! I told my clients if I'm over if they pay less than my estimate they buy lunch, if I under estimate I buy! If I make a mistake my company pays, it's good to be in-charge.

Bill

For the record not all my rep's like this, but they like the referals and knew this is how we did it.

What does the best mean? When it comes to clothes I guess I could go to Walmart and get the cheapest rate, and that is fine, but i would rather pay for excellence and service. I want someone who can steer me clear of fads, or bad fits, or something that makes me look shorter. I want the same from my mortgage provider with a person who looks after my best interest, gives me the best rate that meets my needs, and can explain to me what is best, and I can understand why. I think I would look at brain surgery the same way, give me the best.

Bill - Great blog and comments ! At the end of the day, it does come down to the integrity of the loan officer. I have seen some of our buyer clients seek out the best rate only to be disappointed or bait and switched !

Joe,

I know we agree, but I'm uncomfortable with The Walmart analogy. When you go to Walmart you know what your getting and you save money. When you go to many lenders you think you're getting the best at a great price, when often you get neither!

Thanks for commenting, it means allot!

Bill

Chris, Steph,

Thank you!

Personal and professional integrity are a loan reps only product, you can get the money any where! Getting the right loan at a fair price is a different matter.

Bill

Good post Bill. I have a client who quoted rates to me today from Bankrate. It's amazing how there are 2 lenders quoting 4.75% with no points/origination fees then you scroll down and Wells, Chase, Bank of America, Irwin Union, Washington Federal Savings & Loan and Amtrust are all at 5.75%. Of course the client wants me to give them the 4.75%. I Google'd the names and the complaint list is rather long for false advertising and other bad business practices.

I think I will email them, "The only protection you the consumer has is the personal integrity of your loan originator."

David

David,

Thank you.

Of course we're just high priced! I've never seen anyone closing a full percent under market! We don't make enough to even give away a loan that low.

Bill

Dear Mortgage Person,

Yes, I do want the best deal. To me, money is a commodity. It's like buying soap at Costco. I don't want any frills. I really don't want any advice. I just want money. Nothing more, nothing less. I don't want to be a friend for life. I don't want you to stop by my house with a gift. I really don't want you to spend money sending me stuff after the closing. I just want the money.

I'm a plain vanilla guy. Good credit scores, good ratios. I'm a slam dunk.

Yes, I know many people say that and you end up spending more time than anticipated. But I'm not one of them. So I want to benefit for being such an easy customer.

I know 5 mortgage guys who I can trust to get the job done. They all are trustworthy and honest.

So what's your best deal? I want a 30 year, 5% fixed rate, closing in 30 days, putting 20% down. Please quote me what the lender associated fees will be on that. I think those are all the 800's line items on the HUD-1.

You only get one chance to give me your best deal.

Sincerely,

Mr. Home Buyer

Tim,

We don't set out to make friends it just happens if we're lucky.

"Good credit scores, good ratios. I'm a slam dunk". I'm sorry I hear this a thousand times for every one time when it's true! People spout this because they don't know what they are talking about! To them it's true.

"I know 5 mortgage guys who I can trust to get the job done. They all are trustworthy and honest." Good you only need one so why are you shopping me? Any one with 5 mortgage guys he trust wouldn't be shopping.

I have no idea what my best deal for you would be.

Tim, integrity is just as important in the client!

"The only protection the consumer has is the personal integrity of their loan originator. " In today's market the LO needs some protection too! I wouldn't touch such a fool. No matter how great a deal he gets he's going to cause a fuss and go away dissatisfied.

Bill

For the record. If I take an application I have 3 days by Federal law to provide you all the estimated cost not just my fees.

Bill,

This should be required reading for any home buyer candidate seeking mortgage financing. No doubt about it.

Esko,

Thank you, I agree!

Bill

Great advice William. If it seems too good to be true, it probably is.

Yup. The BEST loan officers I work with do a GREAT job teaching our clients about what they WANT and what it costs to GET IT! That can be a road to understanding, or a road to confusion depending on you. If they don't get it, well maybe they are not the client for you.

Thanks for sharing, great post.

I think this is a great explanation for consumers who really don't understand what they're getting when they shop rates.

JUN

2009

Chris,

"If it seems too good to be true, it probably is."isn't bad advice ether.

Bill

Jeff,

Glad you liked it!

I agree that teaching the client then guiding them through is defiantly the way to go.

Bill

Christine,

Thank you!

Shopping for intangibles is absurd. Real estate and lending services are intangibles because it's the advice not the product that's important. You can get the product from many sources,

Bill

Bill,

What are the best sources for the product if one does not want the advice? Is there a company who has a really low cost structure who passes those savings on to the consumer? Kind of like a Vanguard Index Fund. They are a high quality company who has super low fees on their mutual funds. Is there any such company in the mortgage business?

Bill... what is integrity? lol Seriously, you are preaching to the choir here. But a job well done. I have a woman right now, that keeps shopping me, has called me about 5 days out of 10... yet she needs to close in 3 weeks. I am higher she says, but keeps coming back to me, to see good faith estimates. hhhmmm... and I told her that rates should be coming down today. I wonder if the other loan officers did that.

@ Tim Maitski - I am sure there are a few out there, kind of like those real estate offices that are discount brokers. But the service with these lenders will stink in my opinion, and could take a few months to close. if you need to close in 30 days, you will need someone that will get it done. They won't be the cheapest, but they still will be fair. Plain and simple in my opinion. Bill will agree with me on this and semi stated it in his blog... the best and cheapest on paper now doesn't always turn out that way at the end. Again, just my opinion.

jeff belonger

As a Listing Agent Ilm usually very skeptical when the buyer is using sone form od dot.com Mortgage Co.. In 2005 I had 5 closings where these cyber lenders failed to FUND after weeks of assurances.

As a Buyer Agent ,I believe it is our duty to protect clients from wildcard lenders,

A low rate on the wrong loan is worth nothing, a good rate on the right loan can save people fortunes.

Potential borrowers know only to ask us about rates and costs and all to many figure they can self diagnose. Then they think they can fill that self diagnosed prescription without getting it in writing, or from a "Dr." of questionable ethics, or some internet lender who doesn't return their call/email or even send a good faith or other required documents. Stick with the guy who will sit at your kitchen table and give you the application, good faith, truth in lending and a signed rate lock agreement. And ask should I lock today or not and if so why.

Thanks Bill...as we say, "when the smoke clears, the ones with honesty and integrity will come out smelling like a rose". Another point to add for prospective clients is to make sure the lender/broker fully explains the Float/Lock disclosure. If the lender fails to perform according to the clients selection (Lock or Float) they can be held liable...

Tim,

Today I don't know an individual name, if that's what you want. There are good LO's with bad companies and bad LO's with good companies. I keep coming back to the same line "The only protection the consumer has is the personal integrity of their loan originator. "

With two great comments you deserve a better answer! All I can do is point you in the right direction. Since 1974 mortgage brokers have almost always been less expensive than direct lenders. The competition, greater availability of money and the lower over head that a broker has has save the consumers a fortune! How ever remember what Winston Churchill said "Never say never, never, never, never!" Direct lenders some times do have a better product, it's rare but true. Remember you are only looking for one loan.

The choice gets harder because so many brokers act as mortgage bankers also, the proliferation of brokers with a "corespondent lending division" blurs the line.

Personally I would avoid the retail outlets of large banks and large mortgage banks. I would avoid any company who's office goes beyond dignified and approaches palacal. I wrote a whole chapter on selecting a loan origanator in my book "Get The Money" I wrote a small pragraph on selecting the company.

My advice would be go to the person who's advice you'd want and be prepaired to demonstrate that you don't need it.

Good Luck!

Bill

Jeff,

You ask: "Bill... what is integrity?" Well I can't define it but I know it when I see it!

"I have a woman right now," Congregations!

Your advice to Tim, "the service with these lenders will stink"makes up in wisdom what it lacks in elegance.

Thanks

Bill

Michael,

"As a Buyer Agent ,I believe it is our duty to protect clients from wildcard lenders" It's a two way street, but I couldn't agree more!

Bill

Jon,

I didn't write about "the wrong loan"here, but it's relevant and your right!

Thanks

Bill

Jeff W,

...and so will the cock roaches!

I fully agree about the "float / lock" but I don't put charltons offen sign a lock and then stall till it expires! Evean the value of a signed lock agreement comes bact to: "The only protection the consumer has is the personal integrity of their loan originator. "

Thanks, understanding locks is extremily inportant!

Bill

Love the letter, especially the first couple paragraphs...I run into these online lenders all the time that quote insanely low & screw the borrower's at closing.

Dan,

Thanks!

Everyone wants the bigger and better deal. Fools often ignorantly skip great deals, looking for the imposable!

Bill

JUN

2009

Bill: Great post! Thank you. My fervent wish is that this gets great public dispersion. I think most borrowers (at least the ones I work with or talk to who choose someone else) are treated fairly and are given a good loan. If you think about it, one thing the mortgage crisis did was get rid of alot of the bad apples. Yes, there will always be the advertisers who can't back up what they promise. But, for the most part, I think our customers get a fair shake. But you had to say it. Every mortgage loan officer should have this conversation up front with their client. How we operate our business is paramount. And we should never waver too far from that! Thanks again.

Paul,

You're welcome!

Hope you're right, but I fear we've lost allot of good people too.

Bill

Good post, too bad consumers don't do a more thorough break down of their loan other than the cheapest rate please. Who cares if it's the cheapest and never closes or they screwed days before the closing.

Lyn,

Thank you!

All to many people find that that low rate doesn't exist or they don't qualify for it and lose great opportunities.

With all the add-ons today these faurds don't even have to think up their own excuses. IE: "I'm sorry Miss you can't have the 4.5% because you didn't tell me you weren't a first born son, middle daughters have a 150 basics point add on."

Bill

I've certainly had a few of my mortgage brokers come in and save the day at the last minute because of buyers wanting to use their own mortgage broker that was going to save them thousands in interest and closing costs, only to find they couldn't actually close.

Todd Clark - www.LivingBeaverton.com

Todd,

It's good to have Friends!

Bill

JUL

2009

William I love the concept of drive in ... been there tooo much fun for entire family, I need to study for my blogs or website nice addition. hope you had a great 4th

Thanks Lynn!

Brenda and I had a very quite Forth this year. Amy was busy getting Scott on a plane. Eric and Kendra are in Las Vegas. So are the friends who we normally spend every forth with.

Bill

interesting, very interesting. And that is not just to you Bill, but to many of the replies as well

Daniel,

I do indeed have some interesting readers.

I've been blessed!

Bill

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William J Archambault Jr

Houston, TX

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The Real Estate Investment Institute

Address: The Real Estate Investment Institute, 448 W. 19TH St. Suite 245, Houston, TX, 77008

Office Phone: (702) 516-1569

Cell Phone: (832) 259-7078

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