Never say that you're the only lender or agent offering something!

Mortgage and Lending with Bank of England (NMLS#418481) NMLS# 1046286



 Something For Nothing!


 The Flim Flam Man

Just read the post from a lender offering a .05% credit towards closing costs.  This lender says that they are the "ONLY LENDER OFFERING THIS".  NOT ANY MORE!

Announcing Today!  The ValueList .05% credit towards closing costs!  As a matter of fact, I'll bump your offer to .06% towards closing costs!

Actually, does your borrower need help with their closing costs?  Many do and it's nothing new for a lender to offer a credit.  I've done it hundreds of times over the years and I'll do it again if need be.  

The important thing to remember is that there is no thing such as a free lunch!  If I'm going to credit your buyer a percentage back, I'm making it up somewhere else.  Generally it's in the rate.

For example, if I'm making 1.5% back on the mortgage when I sell it at say 6.0% and your buyer needs me to kick in .5%, I can give them a 6.25% rate that pays me 2.0% back and "give" your borrower the difference.

This can be a very useful tool.  Again, the point that I want you to remember is the no free lunch thing.  Compare the rates and charges from a number of lenders.  We all operate on the same secondary mortgage market and the mortgage industry over-all is one of the most competitive markets in the world.  If a lender is "giving" you something such as a closing costs credit, they are making it up somewhere else.  It doesn't matter if your lender is a broker or a mortgage banker or a bank, there are no magical investors out there who are willing to give something away for nothing.  Most days the spread between my least expensive lender and my most expensive lender on a specific loan program is no more than .375%.  That's a pretty tight spread.

One other point that I would like to make here is that there is a difference between cost and value.  Way too many agents feel that it's there responsibility to beat the lender out of every cent that they can "for their borrower".  I've had agents tell me that they had another loan officer who was promising them a rate that was .125% less than their borrowers had already chosen to lock in with me and that if I didn't match the other lender that they were going to pull the loan.  Is this a service to your buyer?  I don't think so.  First of all, they were probably given the choice to lock in or to float.  If they chose to lock and the rates dropped, the so be it.  How would the borrower feel if the lender came back to them and said, "Oh, the rates have gone up and I know that you locked in, but I'm going to need you to pay 6.25% instead of 6.125%"  They wouldn't like that very much would they?  Or how would you as an agent feel if a loan officer turned one of your buyer's onto an agent who would rebate them part of their commission?  Do unto others....

If you've got a lender who works hard, doesn't gank your people and gets the job done.  Stick with them.  In the long run, getting the people into the home with a smooth transaction is more important than an 1/8th of a percent!


R.B. "Bob" Mitchell

ValueList Real Estate Services, Inc. 



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SEO Expert: Michael George
Phoenix, AZ
Real Estate and Law Firm SEO

If you offer .06%, than the other lender is still the only lender offering .05%.  :-)

Good post.  Most people don't realize how slimy mortgage companies can be.  Yesterday, I lost a good loan to another broker who just plain lied to the buyer.  He offered her 5.625% with no lender fees.  Come on!  I was ticked.  I tried to explain what a closing table surprise is, but she went with the other guy.

Mar 30, 2007 04:58 AM #1
Jacob Morales - Arizona Mortgage Planner
US Bank - Scottsdale, AZ

I hate the old bate and switch garbage that happens in our industry. It really drives me nuts.

Although I will say that it is possible for me to give .5% off the discount and sometimes rate. Since I'm a mortgage banker my branch is given every monthly "subsidy" money for when loans are short the required 1% origination. Mind you I'm a retail banker so our rates "can" (but not always are) be slightly higher than wholesale rates, but it can happen.

I am doing a loan for a close personal friend as we speak that I am charging her no origination, no discount and nothing on the back. My bank is giving me the 1% to help her out.

Mar 30, 2007 05:11 AM #2
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R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham

Bob Mitchell (NMLS#1046286)
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