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Who Wants A "Free" Loan?

By
Services for Real Estate Pros with Auto & Home & Life Insurance throughout North Carolina

If you answered with a resounding "YES" to that question, you aren't alone.  I can't think of many sane individuals who don't want the best deal possible, and when the word "free" is mentioned... people tend to flock in interest like the George Foreman family to a Bobby Flay BBQ.  While it seems the path of least resistance, to jump at what appears to be the least (or no) amount of money for a service rendered or product delivered... it most times ends up the path of greatest disappointment.

Such is life...

Back in some of my more naive years, I used to think that when my parents offered up the timeless cliche "you get what you pay for" that the very slogan they were spouting was probably conjured up by some individual(s) who just wanted to soak up every bit of money they could from unsuspecting folks who needed their product and/or service.  Then my naive nature awoke to a staunch reality.  There may be something to that.

The Mortgage Business is an interesting one, for sure.  We compete on many levels (service, lowest rate, lowest fees, name brand, delivery, reputation, marketing, etc) but it is no more interesting than most businesses who compete on similar levels.  Let me digress:

  • Have you ever purchased anything from an infomercial you saw on television?  Come on, be honest.  Okay then, I have.  I'll put it this way, there won't be any testimonials airing anytime soon from yours truly on how I became a multi-millionaire while sitting and sipping cocoa in my underwear from the confines of my humble abode.

Perhaps that isn't the best example in the world, yet I think it drives home another age old point of view... "If it sounds too good to be true, it probably is."  That written, here's a few Marketing Gems you've probably seen, or things you've said you wanted from the Mortgage Industry that may not be all they are cracked up to represent - or, you were just smart to ask for in the first place:

  • No Closing Costs and/or No Fee Mortgage Loans!  I've never offered this product.  That certainly doesn't mean it is bad; I just am unable to offer it.  What it means for you as a consumer is that you'll see a much higher interest rate than the ones the market is currently bearing.  Does it make sense?  That depends on your situation, frankly.  For me, the longer I plan on staying in my home, the lower I want my interest rate to be.  If I don't want to pay points of any kind, I should expect a higher rate.  The profits are being made somewhere.  On no closing cost, no point loans, those profits are on the back-end... in the form of a higher, sometimes much higher, interest rate.
  • I want your lowest rate with no fees.  Have you ever called a Mortgage Company or Bank and said that?  If you have, you aren't getting the lowest rate.  End of story.
  • I'm going to log on to Zillow.Com or BankRate.Com and get the best quote possible!  It's called low-ball offers, folks.  The honest ones are typically disclosing at a more expensive pace.  You'll probably (from the low-ballers) be getting quotes on 15-day locks (not done nearly as much as you would think, for a variety of reasons) instead of 30 or 60 day locks... which are more realistic, especially in this market.  To boot, you may get a version of the bait and switch when you contact that sweet quote and hear that, "Rates change daily, the quote I gave you isn't available as I disclosed."  The fact is rates DO change daily, no question about that.  Yet, using that to draw in phone calls and emails isn't somebody I want to work with.  That's just me.  We all make money, as a consumer... I just want a fair shake.
  • No Application Fee!  First off, I don't believe in application fees at all unless they are applied to paying for the appraisal or refunded if your loan doesn't close.  I have a very simple philosophy here, if your loan doesn't close... nobody should be making a dime off of you.  If I had charged for every application I have taken in the past eight years, I'd be sipping martini's with Gene Hackman in the Cayman Islands.  Sorry, just wanted to work in a reference to the film, "The Firm."
  • Does your town or city get a Sunday paper?  Mine does.  There's a section where Mortgage Companies and Banks advertise rates.  I'm not sure about areas outside of Allentown, Pennsylvania... but we used to advertise in there every week.  Our advertisement was due by Wednesday and came out Sunday.  Is there something wrong with that picture?  Yup.  Rates could have changed, sometimes significantly, on Thursday or Friday.  So of course you get rates that may or may not even be relevant when you turn to that section on any given Sunday. 

For what it is worth, my advice is as follows when shopping for a mortgage to buy or refinance a home:

  • Reputation, Education, Price.  While I wouldn't recommend taking the most expensive deal in town, I don't think it is a splendid idea to jump at the cheapest either.  If you want a free loan, hit up Aunt Mary and stiff her while trying to live with yourself.  You won't find it in lending institutions of any kind.  As long as it takes money to buy things, profits and personal income need to be made to survive and thrive.  And for God's Sake, make sure they are prone to calling and/or emailing you back in a very timely manner.  If days go by, tell them buh-bye!

Jason Sardi is a human being involved in the Mortgage Industry.  Other than being a former star on an undefeated Little League Team, hitting the winning shot "Chip Hilton" style in a high school basketball game to defeat the best team in the league, he has also made a prominent (in the day) high school wrestler who just competed in the Olympic Try-Outs tap out in less than two minutes.  Come to think of it, maybe that's why that wrestler didn't make the team. 

I can be reached via email at jsardi@ihmci.com or on my cell phone @ 610-653-0317. 

Sheldon Neal
Bergen County, NJ - RE/MAX Real Estate Limited - Maywood, NJ
That British Agent Bergen County NJ

... nice ! I'm a visualaholic !!!

...oh and thanks, the little one is doing great ! ...although being a newborn can be pretty tiring !

Apr 16, 2009 02:20 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Paul - "No borrower is necessarily a slam-dunk these days." Ain't that the truth. Sheldon - If you are a visualaholic, I'm your man. Nice pic of the newborn, while I'm not a subscriber to the "all babies are cute" thing, you truly have an adorable one there.
Apr 16, 2009 02:44 AM
Russell Lewis
Realty Austin, Austin Texas Real Estate - Austin, TX
Broker,CLHMS,GRI

So...it was Jason C. who had to point out that a certain girl was "flirting" with you? Hmmm...keen eye for the obvious and actually I find that as endearing as it is funny!

Apr 16, 2009 02:57 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Russell - Me too:)
Apr 16, 2009 03:09 AM
Anonymous
Bill Burns

Thanks Jason!  The quality of service is remembered long after the cost has been forgotten.  I believe it wise to seek out quality and be glad to pay for it.  Like the time I accepted the highest bid for my new hearting and a/c system recently.  Am very happy with the result.

In a service business like Real Estate and mortgages this "quality" thing is definitely a challenge to communicate.  Direct honesty is always the best route. 

Your clients obviously have chosen well.

Apr 16, 2009 03:51 AM
#16
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Bill - Thanks! "I believe it wise to seek out quality and be glad to pay for it." I agree. While there certainly are limitations on the price most of us are willing to pay for just about anything, quality tends to be cheaper over the long haul. Same case in our industry in my opinion.
Apr 16, 2009 04:03 AM
Rich Dansereau
Positive Real Estate Professionals - Knoxville, TN

This is a great, reality based post. It is more than unfortunate, it is generally to the detriment of anxious clients, that they oftentimes jump at the key words they choose to hear. Remember those commercials you had to turn down because some idiot kept screaming FREE? If everything is FREE how did they pay for that commercial, or that suit the screaming idiot is wearing, and where is the magic place where these FREE (insert product here) are being manufactured using only unicorn farts and rainbows? It is the type of mortgage "professional" or "expert" or "huckster" that Carol Smith referred to in her comment that has removed most sensibility and reason from the process (which usually does last longer than 15 days).

Apr 16, 2009 04:48 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Good points and I have made them to my buyers before.  I think people get tired of all the fees piled into a loan statement that are beyond comprehension to them.  They thought of just having to think about the interest rate appeals to them, even though it might not make the most sense for them economically.

Buying a home/getting a home loan is more stressful to people than getting married.  (I think many people do more research and shopping for the home than they do a spouse.)  At the end of the day they cannot even deal with the thought of all those fees.

Apr 16, 2009 04:56 AM
Jolynne Photography, Creative Wedding Photography, Family Portraits, Bar Mitzvahs
Jolynne Photography - Hemet, CA
Bat Mitzvahs, Senior Pictures, Event Photography

Hey Jason...I'm going to copy this word for word and publish it as if I wrote it!

Well, not really. Well done, amigo.

Apr 16, 2009 05:15 AM
Gerry Suarez Jr.
New American Funding NMLS 6606 - Orlando, FL
FL Mortgage Guru

So well said as usual Sardi. If we could only get people to believe it before having the bad experience with the "low price lender".

Gerry Suarez, Jr.

Your FHA Loan Pro!

Apr 16, 2009 06:13 AM
Jay-Paul Lowry
Riverside, CA

Jason - Great post. Love it.

 

JP Lowry --President--Preferred Financial Funding, Inc

Apr 16, 2009 06:52 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Rather than comment to folks individually, I just want to thank you for the comments and feedback. For some reason, there appears to be something wrong with my comment section of my posts... as everything is getting jumbled together. I'll bet Suarez's left earlobe that scoundrel Blanton (AR's somewhat new staff member) has something to do with it:)
Apr 16, 2009 06:57 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

J Sard,

My crytal ball is broken!  How about yours??

You know, the word Free is part of the word, FREELOADER!  I think buidling VALUE in what we do is the key!  If we dont TELL & SHOW the customer what we are ACTUALLY doing for them, then we only have OURSELVES to blame!

 Nice post...I have bookmarked this one!  I may Re-blog you at some point too!

Thanks a ton!

D-Mo

Apr 17, 2009 10:37 AM
Carrie Sampron
Home Smart Realty Group - Highlands Ranch, CO
ABR SFR & Kathy Sampron (303) 931-3629 Highlands R

Jason:  Great points.  Thanks for the post!

Apr 17, 2009 11:22 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

"Jason Sardi is a human being involved in the Mortgage Industry".  I liked that ending phrase but it seems unfinished?  As in Jason is now insane?  Is Jason really human, tune in at 10?

Good points so go get a loan.

Apr 17, 2009 02:16 PM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Darin -  Heck, if I had crystal ball I'd be Sardradamus;)  I agree that building value in what you do is key, regardless of your profession.  Thanks man.

Carrie & Kathy - Thanks for stopping by!

Lyn - Jason isn't insane quite yet.  The frontal lobes are still functional and the voices in my head aren't loud enough to steer my sanity.  In due time, I'm sure:)

Apr 18, 2009 02:46 AM
Patricia Kennedy
RLAH@properties - Washington, DC
Home in the Capital

Even "free" loans from parents can get really expensive.  And parents often don't disclose the terms - and they make any fees you include look like a bargain!

Apr 18, 2009 05:25 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Patricia - Shoot, I am quite sure I owe my parents a bundle over the years.  I keep telling them that an IOU from me is as good as cash;)

Apr 18, 2009 06:16 AM
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

Thanks for the No Application Fee part.  I'm always telling people not to pay application fees, and yet I always hear that they have.  I was starting to think I was somehow off base, yet there it is.

Apr 23, 2009 11:13 AM
Naoma Doriguzzi
Virginia Beach - Virginia Beach, VA
New Media Director

I know I do mortgages and still have to pay the fees to refi or purchase.  This isn't a car dealership where everything is negotiable

Apr 29, 2009 08:49 AM