Spokane Real Estate and Mortgage Info

During the last three weeks I’ve discussed how your property location, credit score, your specific loan scenario, timing, and games sales people play can significantly impact the rate you pay for your loan. If you’ve missed any of the last three parts you can view them at PART I, PART II, and PART III.

Games Sales People Play, is such a large topic itself, I had to break it up into two parts! The reason that it’s even possible to play games with you and your rate is because the mortgage lending process is complicated – plain and simple. In addition, the salespeople have a huge advantage over you. While you may get a home loan 2-3 times in your lifetime the sales people are closing at least that many loans every month.

To help you make smart decisions about home loan financing, let me share with you some of the insider secrets I’ve learned during my 19 years in the business:

Telling you that you can’t Lock until Approval – An important question to ask the lender from whom you are getting a rate quote is “can I lock the rate right now, over the phone?” For most lenders, the answer is no. Making you wait to Lock until your loan is approved means you are subject to anywhere from 2 weeks to a month of rate market changes. Basically, you have applied for a loan with the final terms left open till a later date. It’s kind of like writing a blank check to your lender! Why would a lender tell you this? Well, it’s to the sales person’s advantage if they can convince you not to lock your loan. Your guard is typically lowered once you’ve been in process with the lender for a few weeks and they can take advantage of this. Realize that when you called them on the phone a few weeks prior, they told you whatever rate they thought you needed to hear to get you to apply. Now, you can bet their “best” rate quote won’t be nearly as aggressive when they’ve got $450 of your money, non-refundable, and have collected all your private financial information for the last three weeks. Are you really going to cancel just because they quote you a rate that is 1/8% higher than someone else? And that’s assuming you even notice. You can prevent this from happening by selecting a lender that is able to lock you right up front, over the phone.

Rates are low and it looks like they may stay that way for the next few months as our government pumps tons of money into the mortgage business in an attempt to stabilize the housing mess. Lenders are slammed with refinance applications and are operating with a fraction of the staff they had a couple of years ago. It’s not a pretty process – a couple of the largest banks are taking 60 days to process a loan!

Rebecca and I hand select our lenders, and to date have been able to keep our process to 30 days or so.

So, the next time you ask a lender “what’s your rate?” just remember that it is virtually impossible for them to give you a valid rate quote. The only way to give you an accurate and valid quote is to have a full loan application, appraisal, and credit report. Anything less than that and the rate quote is just an educated guess at best.

So how do Rebecca and I overcome these roadblocks to providing you a rate quote you can count on? First, we take your information by telephone in about a 15 minute conversation. It’s not necessary to come in for a two hour loan application appointment. Second, we will order a credit report for you. We can provide you a written Good Faith Estimate with a valid rate quote and we can lock right over the telephone at the point of our conversation. There is never any up-front money collected or costs incurred by our customers until such time as they have a solid, written proposal upon which they can make a smart decision.

If you have a question about lending or real estate, please send Rebecca and I an email at MMullin@TheLoanConsultant.com, or give us a call at 509-252-9151. We’d love to share our knowledge with you!

During the last two weeks I’ve discussed how your property location, credit score, your specific loan scenario, and timing can significantly impact the rate you pay for your loan. If you’ve missed either or both of the last two parts you can view them at PART I, and PART II.

Now we’ve arrived at the part I’m most passionate about - Games sales people play to bamboozle you. If you have read the previous sections you should honestly be saying to yourself – “hey, there is absolutely ZERO chance the mortgage guy I talked to on the telephone gave me a valid rate quote, or even if he did, that the quote is still valid now.”

To help you make a smart decision about what lender to work with, let me share with you some of the insider secrets I’ve learned during my 19 years in the business:

· Low Ball rate quotes over the telephone - The loan salesperson’s main motivation is to get you to make a formal application and cough up a non-refundable “application fee.” Given this motivation (and the information I’ve provided about all the factors that impact your rate), do you honestly think the rates you see published on web pages, in print, or given verbally over the phone are accurate and valid? Nope! Usually they are just low enough to entice you to call. Once they have your non-refundable application fee they can sell you on a higher rate very easily by referring you to any one, or more, of the “add on” factors I’ve mentioned previously. The conversation, quite honestly, goes like this – “gee, I’m sorry Mr. Borrower. After you applied I ordered your credit report and your credit score is a 685. I have to add .875% in fees to your loan.” A professional lender will allow you to hold off on the non-refundable fee until AFTER they’ve seen your credit report and given you a valid rate quote.

· Encouraging you to Float instead of Locking – when you apply for a loan, one of the first choices you have to make is whether to Lock the rate (if the lender allows this option before loan approval, see below) or whether to Float with the market while you are in process. If your motivation is to Float (gamble) with the market please understand you have just given the lender the ability to play games with your rate! Here’s how it works – you’ve applied with Sally Saleswoman because she had the “best rate” when you were rate shopping. Unbeknownst to you she gave you a Low Ball quote to get you to apply. You’ve now made application, paid your $450 non-refundable Appraisal/Application Fee, and handed over all your confidential financial information. Sally Saleswoman confidently advises you that “lenders offer the BEST rates when we only lock for 15 days. A 30 day lock is always more expensive – like .5% in added costs. If you want to pay the extra fees that’s ok. Or we can process your file to completion and then we’ll be in a position to lock for only 15 days and you’ll get the best pricing.” Sounds pretty good, doesn’t it? There are two problems with this scenario. First, if rates get worse by even a smidgen (see Timing in part two of this series) the rate you pay when you are eligible to lock for 15 days could be WAY higher than the rate you could have had if you had locked up front for 30 days!!!! Second, Sally Saleswoman knows you won’t back out if you wait to lock until only 15 days before closing escrow. She no longer has to honor the Low Ball offer she gave you to get your application and can now extract as much from you as she thinks she can get away with. Does every mortgage person play the game this way? Of course not! But given what you read in the papers about greed and irresponsible behavior do you think it’s possible that a good percentage of the mortgage people behave this way? How do you know whether you lender is playing games with you? There’s a secret way to expose the game players, and I’ll write about that shortly.

If you have a question about lending or real estate, please send Rebecca and I an email at MMullin@TheLoanConsultant.com, or give us a call at 509-252-9151. We’d love to share our knowledge with you!