Recently, I received an online request from a prospect who was looking on the internet for mortgage companies and found us in the search engines.  The good news, is this means my SEO is working, especially since I wasn't even aware that we ranked for that particular keyword.  The bad news is that I was unable to help her out.  Here's why:

The prospect requested that I email her a Good Faith Estimate (GFE) (not an unusual request, as most people who apply for mortgages are shoppers who typically like to compare rates and fees from competing lenders).  However, although she did provide me with some personal information (credit score, purchase price, downpayment) this was not enough information to provide her with the information she needed.  With no contact information other than an email address,  I responded back that we would need a completed full mortgage application, in order to provide her with an accurate GFE.  She never responded back.

Now, I'm not against sending a prospect a GFE, I do it all the time. In fact, it's required that you provide RESPA disclosures within three business days of an initial mortgage application. But the key word is "application".   There are many different criteria that go into pricing a mortgage loan; credit (of course), income, employment history, Loan to value (or % of down payments for purchases), and purpose of the loan, among other criteria. And while a Good Faith Estimate is just that, an estimate, any responsible mortgage professional does everything possible to make sure that their estimates are accurate (or at least very close). If I would have sent that customer a GFE for, say 6% on a 30 Year Fixed Mortgage, and she commited to doing the loan based on my estimate, only to find out later that the rate she qualifies for is actually significantly higher (or that she doesn't qualify at all), at best I would be looked at as incompetent; at worse, a dishonest loan officer that this industry is currently trying to shake out as we speak.  If I'm going to quote you a rate (especially in writing), I want to make sure it's an estimate I can stand by.  

There are other concerns here as well.  First, I'm relatively sure that we are probably not the only mortgage company that received the same request from this potential customer.  She was obviously shopping around and may have even been urged by another mortgage company or perhaps her real estate agent to get a few estimates.  The issue here is that although she was not going to get a GFE without completing a mortgage application from my company, I am pretty sure that she will manage to get one from someone else.  Afterall, most loan officers are hurting, business is down, and this client with her 720 credit score (according to her), money to put down, and good size loan amount would seem like an easy payday.  Some loan officer somewhere will toss out a few figures (which will be way lower than actual figures at closing) in order to get the prospect in the door.  However, this is a bad way to do business, for both the customer and the loan officer since they are both making decisions based on assumptions. 

The second concern is that because a mortgage can be a complicated transaction, there is no one size fits all scenario or price.  Shopping for a mortgage online is not like buying a book, or a camera.  You cannot just type what you are looking for into google and choose the merchant with the lowest price for the particular title or model that you need.  But, even if you could, shopping based on price alone is ignoring another important factor which is service.   If you are not taking time to speak to a loan officer, ask questions, and get to learn about how they do business, and you are choosing your mortgage company based on the lowest quoted price, you may be potentially making another mistake.  The company may be cheap, but are they competent and can they close your loan?   

 I can only hope that things work out for this customer, and that she doesn't have to learn the hard way that it's not Good, to put her all of your Faith, in an Estimate ... without submitting a full  application first.

Written by Michelle Chamberlain of Above All Financial Services, a Pennsylvania Mortgage Broker.  To learn more about applying for a residential mortgage visit www.aboveallmortgage.com .  For information on Small Business Financing visit www.ezmerchantadvance.com.