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22 Comments on Don't "Cut Your Nose Off and Spite Your Face" when it comes to your Mortgage Financing
This is another interesting lesson for the consumer. Everyone shops around for the lowest rate but, iike anything, you get what you pay for.
Its tough to help people who don't know what they're really looking for. The only thing worse than that is the exact opposite folks who NEED to go to the big horse wagon bank (or whatever) EVEN if they get a higher rate and/or higher costs.
*sigh* May God rest the poor souls of the big bank mortgage borrowers...
Great explanation of the process Gene. Lot's of folks should read this.
Many times its the company with the worst service that is offering that "lower" rate. The consumer doesn't see that side of it until its too late.
I saw report yesterday where a certain big bank is taking names to call refinance borrowers back in 60-90 days. With those borrowers, they might actually be refinanced 6 months after they first call.
So True Gene! Great Post. Not to mention that not ever client's need is the same. The Internet lender who advertises a low rate is not concerned about your specific situation, he is trying do a large number of loans. Hence doesn't have the time for you. Finding the right mortgage person is more important than finding the right rate.
Rates are so ridiculously low right now that the impact of an 1/8th of a point variance is too minuscule to bother with. It's laughable. But we're programmed to pay attention to those rates. What should we be looking at, Gene?
Jane: Another "saying"!! Good going! But you're so right ... the bugger is in the details of the loan. Not always just the rate. But the media plays that up with no mention of the details ... so that's what consumers look for and think is all important. So frustrating at times when you cannot get them to see beyond that ...
Steven: Amen! But at the same time, as the "little guy" I gain SO much business when they mess-up or aren't available when their client needs them. So ... a little bit of a mixed bag there on my part. Heck, they make business for you and I at times!!
Thanks Gabe ... and I hope they do. I'm hoping for some bookmarking and re-blogging too ...
Know exactly who you're speaking of Rodney. And believe me, I'm going to use that little article I saw to my advantage. But I ask ... who in their right minds would wait that long to be serviced by that company??? THAT boggles my mind ...
Dave: Thanks! And we need to keep on preachin' that point. But we're battling the big media .. and that's all they focus on. It undermines our credibility a bit when we try to tell them something a bit different. It's definitely an uphill battle for lender like you, Rodney, and I ... here on the Rain and elsewhere ...
Elizabeth: I like the question! Shows you're really paying attention and reading the entire post. It's very hard to write just WHAT a client should be looking for when shopping for a loan. The answer lies in their personal financial scenario. Mortgage lending has gotten so detailed and nuanced that the choices can be many. And sometimes that "best" program lies out there with another lender ... as not all lenders offer the very same mortgage options. Exactly why I say it's best to work with a lender that is a unique blend. One that understands and knows ALL the options that exist, whether they offer them or not ... and then is enough man/woman to educate the client to that existence and point them to the lender that offers that product. As I said before ... the answers lie in the buggers of the details ... and the individual character of the lender you work with. Not a simple answer to give, Elizabeth ...
But as far as the 1/8th point being to miniscule ... in the minds of most borrowers that is simply not true. They fret and worry over that 1/8th and take their eye off the ball in regards to the details and mortgage program they are/should be considering. THAT is what makes this so frustrating .. and exactly WHY I wrote the blog. Borrowers need to know that it's both rate and mortgage program that is important ... not simply one or the other ...
Sorry I rambled on, but you raised an excellent point ... thank you ...
Gene
Gene- My friend, great job on the feature! You are totally preaching to the choir on this one. You are exactly right that rate is not everything. Good example, I had a Realtor give me a referral, got the client pre-approved and then the man shopped me. Great he has every right to do so. BUT...he told me the other lender off the INTERNET, told him he could do a .125% better in rate than my quote and then pay for the closing costing cost. Yeah right! I stressed to him there was no way this lender could pay for all the closing cost with that rate. The Realtor explained to him that I am honest and will not steer him wrong and he needs to make sure if he left me the other company was going to come through with their word. Well the day of the closing, the client got the HUD and he had to bring $4500 more to the closing table than my quote. Yeah the other lender said he would pay the mortgage fees (underwriting and processing) but not all the FEES that are associated with a mortgage. The internet lender sold it as all fees but not the few they have control on.... The client had to sign those docs because the seller was not willing to extend the contract so the buyer was out of pocket almost $5K.
It's tough to help people thru the process when they don't want to take the time to learn what would be advantageous to them in the longer run.
Gene -- your comments are so pertinent in today's market. And Stephanie's story (#10) solidifies the point you are making. One other thing that so many miss, is that many of the "lowest rates" are based on 720+ credit and 80% LTV; and/or they are charging you points for a buydown of the rate. Much better to have the best program for each individual client.
Exactly what I think is going on with the client I mentioned within my post. I'm afraid that they too will find that they are not getting the full story. Good example, Stephanie. And we can lead the horse to water .... but ....
We keep trying, don't we Lyn?? Feel like we're swimming upstream sometimes though ...
Steven: Yep ... but they don't tell .. or imply ... that there is an asterik to their quotes or statements. Totally misleading. Makes our job so much harder in the long run. People are so distrusting because of it. We keep on keepin' on though. Hopefully if there are more lenders like you .. Stephanie ... me ... we eventually win back the public's trust ...
Thanks for writing ... it's great to hear from all of you ...
Gene
Gene - This is such an important concept, and so many get caught up in just the interest rates without regard for type of loan or length of loan or indexes and margins on ARMs. It just doesn't make sense to look at it so one dimensionally.
Take your time. Compare apples to apples, not just interest rates alone. Get the total picture.
Gene ~ Like most consumers, I don't know the "inside scoop" on the various mortgage programs available today. That's why consumers need a trusted and experienced advisor like YOU to help guide them through the maze of offerings! I hope that potential home buyers are reading your post and paying attention because you can definitely help them :-)
Excellent post! It's so important for one to work with a mortgage broker/lender who will help them look at their options and what is best for them rather than the mortgage broker's bottom line. Knowledge, experience and customer service are the most important, not just the lowest interest rate or reduced origination fee. These factors can save more in the long run. I wrote a blog on what one should consider, questions they should ask, when working with reverse mortgage originators (my area of specialty) to help people know there are more factors to choosing an originator than an interest rate and low or no origination fee. Thanks for sharing!
Christine: You're right .. there is a entire large menu of programs at times that can be considered, prior to final choice. It does make sense to work with a lender that will take the time to go over ALL those options with you. Then you know afterwards that you definitely made the right choice for you ...
Erica: Yep! Definitely the thing to do .. especially when comparing multiple mortgage lenders options too ...
Maureen: You're so kind! Thank you ... and I'M hoping that as well!! Shameless, right??
Beth: Ahhh .. you are working in an especially tough field too. Special care must be taken with your clients ... and more time. Bless you for tackling this much-needed form of lending. Choosing a mortgage lender is always important. But in your field of expertise, that's doubly so ... Thank you for your kind words in regards to the post. I'm happy it proved beneficial to you ...
Gene
Well stated, consumers need to spend the time to get themselves educated so they understand the game. Keep on posting the good stuff and maybe a few more will get it.
We can try, right David?? Exactly why you and I blog. I also hope that realtor/brokers are learning something as well. An educated, knowledgeable agent is a great asset within a transaction.
Thanks for writing! Hope all is going well for you in your neck-of-the-woods ...
Gene
Gene: Thank you. I've lost a few loans recently due to this attitude. I personally think I need to get wiser. I don't want to be known as the low rate and fee guy but also want to win more business. This is helpful. Thanks again!
VERY tough call at times ... and unfortunately you can lead them to the water, you can't make them drink, Paul. It's definitely an artform at times, this pricing of mortgages. NO one wins them all ...
Gene