It amazes me that so many first time home buyers think that they know it all....When they actually have not been told it all at all!
The First Time Home Buyer calls a lender and the lender says " We have CHFA which offers 5.25% rate for first time home buyers " They think wow, now that's a great deal! - But do they get the facts?
Unlike most loan officers who are just trying to sell a buyer on rate, I have always based my business on being 100% honest, giving the buyers the pros and con's of every program that meets their individual needs, educating the buyers and letting the make the ultimate decision based on the facts.
About 2 weeks ago I had a real estate agent refer me a first time home buyer, after running the application I was able to get the buyer an approval for a mortgage which was a 100% finance, last week the buyer found a home, the agent called me to let me know, I then called the buyer to congratulate him and got his voice mail, I asked him to call me so we can meet and go over all his options and see what mortgage program best fits his needs. Well after 5 days no call back? I called again yesterday, no call back.... Last night I get an e-mail from the agent stating the buyer called him late yesterday and said " I just want to let you know I went and got the mortgage started and we are all set" the agent asked: "have you been in contact with Leo?" the buyers said "no I went to my bank and they told me they can give me a rate of 5.25% with CHFA"........
HOLD ON HERE..... Now first of all you are making the biggest financial decision of your young 20 something year old life, you spoke with your bank about the ONE AND ONLY 100% program they offered and that's the best program for you? How do you know that? That is the only program they offer for 100% financing.....
Last night I called the buyer again after I got the news to ask him some simple questions and of course as he did the past few days let my call go to voice mail, I left a message " Joe I just wanted to follow up with you about your mortgage, Mike told me that you have decided to go with xzz Bank and the CHFA Program which offers a 5.25% rate currently, I agree that is a great rate and that program is very good, we too can offer that program but have you been told about any other programs and the pro's and con's of each? I would think that making the biggest financial decision of your life that you would compare programs, costs and payments before you choose a mortgage. I assume that the loan officer told you about the Recapture Tax that CHFA has if you sell the home or dispose of the CHFA mortgage in the first 9 years after buying it, I assume they told you that you MUST attend a class for first time home buyers, I assume they told you the extensive paper work involved with that program, I assume they told you there is a 1 point origination fee with every CHFA loan regardless of the lender, I assume they told you that your debt to income ratio at 49% may not qualify for this loan, I assume that you know there is a $200 application fee for the 2nd mortgage. If you have been made aware of all this then that is great but I would think you compare options before you settle on the one and only program that your bank offers for 100% financing? Like I said CHFA is a great program but not comparing mortgages is a big mistake.
I offered to meet with him still and go through the programs available to him so he can make the right decision based on the facts, I said "after all I build customers for life, I just don't want to give you a mortgage solely based on rate"
It is too bad that people can get fooled into a mortgage solely based on rate. Rate is not the reason to get into a mortgage, who knows after comparing all the mortgage options available he still may haven chosen to go with the CHFA program which would be fine, but know what you are getting into and know that is the best for you and your situation. We have programs that would be very close to if not the same rate and costs as CHFA without the restrictions and that may be the better way to go.
This post is not to in any way bash or degrade CHFA which is a great program, the point here is that people should be made aware of all the options and facts and not jump into a mortgage because someone told you that this is your best rate.
Leo Namiot
Benchmark Mortgage
Comments(0)