Could any of the mortgage brokers out there help me with this one? I just received a phone call from a man who asked me to give him a mortgage quote. He told me he was shopping. I made sure I made it as tight as I could...
Here are the details: $210,000 loan amount / property value is $285,000. Loan-to-value will be just under 75%. It is an Arizona investment property and he wants a 5/1 interest-only ARM.
I shopped around. I found interest rates as high as 8.375% with MortgageIT and the best rate I found was 6.5% with American Mortgage Network (AmNet). At 6.5%, I was earning a very modest commission, and I wasn't charging points or any "junk" fees-- just the bank's underwriting charge.
This is exactly what he told me: "There is no point in speaking to you any further, because you aren't even in the ballpark. I have spoken to several mortgage companies and they are all under 6%."
Then he hung up before I could say anything more.
I am a victim of my bait-and-switch competition all of the time, but its always "one lender told me..." This guy seemed so outraged at my quote, that I actually believe several people really did quote him less than 6%.
So I have to ask: Are there any mortgage brokers out there that can actually offer 5.875% on an interest-only, 5/1 ARM, non-owner occupied, no points? If so, could you please tell me where you get these magical rates?
Due to my obvious anger, this might be a good example of a "members only" post, but I am making it public.
Public: If you find mortgage deals that are too good to be true, than they are too good to be true. Go with an honest company rather than throw the dice because the guy on the end of the phone is a good salesman.
The client I lost today? He won't be getting "under 6%" as he fantasizes. Not on a Fannie Mae, interest-only, 5 year ARM. You have got to be kidding me!
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Hi Karen - No one can do that note and rate on a 5/1, and you know it as well as I do. That said, I can tell you how to match the rate and keep it match for a 5 year period. And if you want to trash your ethics (and I know you don't) you could sell it as a 5/1. I have been blind sided by this one and it twists my undies into one tight bundle to see brokers sell it to unsuspecting borrowers.
It's called lying about a Pay Option Arm and calling it a 5/1. If the borrower takes the minimum payment option (and sometimes the interest only option will work as well) the effect is making payments at that 5.875% or better rate. Of course, the borrower is going to go upside-down in the deal, and in five years when the thing recasts it will look just like a 5/1 hitting its adjustment. It just won't have any equity built outside of partial appreciation (if the property appreciates enough).
I'll tell you, when I get a shopper on the phone, I tell them outright that I cannot ethically give them a rate without more information (with verification) in front of me. If they push I give them the best rate available "closing today - based on the information you just gave me," and I remind them that this rate is not necessarily accurate to their situation or timetable.
You just keep doing what you are doing - up front and honest. Our profession needs more like you!