Most lenders have one goal. Close your loan. How they get there, and how they do their job, varies from Loan Originator to Loan Originator, but in the end, and here’s the brutal truth, they will do anything to close your loan. If your loan doesn’t close… they don’t get paid. 

Period. 

Now, some lenders make an hourly wage but most of those are draws against commission. Meaning they get paid an hourly wage but, essentially, have to pay it back when they close a loan. There is nothing more demoralizing as a lender than to have a nice closing and all of the commission go towards paying off your draws. And they will do anything, and say anything, to make sure that doesn’t happen. 

The other piece most people don’t know is that in most lending organizations the Loan Originators are salespeople. They are paid like salespeople. They are (dis)respected like salespeople and they act like salespeople. If you have ever purchased a used car then you’ve met the cloth most Loan Originators are cut from. 

Of course, no mortgage company would exist without their ‘sales’ staff. The money that is brought in to lenders on these mortgages is the fuel that runs the entire organization. The Loan Originators know this and often act like they walk on water. (Note… they don’t)

If a lender has a chance to steal someone else’s deal, from another company, of course, they will do everything they can. Up to and including making outrageous and morally flexible claims. 

As an honest and transparent lender, I always estimate fees high. I find it always best to set the expectations for the worst-case scenario and have the costs of the fees come in lower. Morally flexible lenders trying to steal a deal will tell you that they have no fees, they do, that there are no closing costs, there always are and that their rates can’t be beaten, they can. If you are shopping between lenders, which I totally encourage, and one lender sends you a Loan Estimate with actual fees and rates that are expected and the lender you are shopping with is unwilling to do so, they are not being honest. If you are the type of person who shares information from an honest and transparent person with someone trying to steal a deal, and you don’t give the original person a chance to meet what is being proposed, then the moral flexibility is on you. 

I work very hard on behalf of my clients. I can compete, I always do and I always win. I always win on honesty and transparency and I always win on going the extra mile and working hard on your behalf. When there is a tangible and authentic loan estimate that I cannot compete with or is a great deal, I let them know. I know what I can do and I know what I am willing to do. 

I recently lost a deal to a client I had been working with for over eight months. I spent countless hours on the phone with them, talking to listing agents and sellers on their behalf and being available virtually every day at virtually every hour. Once they went under contract I did my required duties and sent them a proper Loan Estimate. They promptly sent that to another lender and never gave me the opportunity to meet or review the other lender’s loan estimate. They never gave me the courtesy of a phone call informing me that they went with another lender. They used their moral flexibility. They used my services and time and efforts for the better part of the year to get them their dream home and when the rubber met the road they weren’t willing to give me five minutes. 

I, of course, wish them the best of luck but in the end, treating people who have invested so much on your behalf as a commodity is an insult.

Those lenders who actively employ Loan Officers who act differently are not the ones you want to do business with. Find a partner who you can trust. Find a partner who is willing to invest their time and best efforts in you and your financial future. Find a partner who is honest and transparent. And if you do shop in the end, give them the opportunity to see what they are up against and let them see what they can do to match or beat rates, fees, etc…

Otherwise, you might be the reason why that honest and transparent relationship-based lender becomes a salesperson in the end. Regardless, I remain unswayed. Mine is the best way to be a Loan Originator. That of being a mentor, being available, and being honest and transparent. 

 

Why is it painful to use a cubicle-based mortgage professional? Well, most often, they are in a call center. So, perhaps, I could have titled this “The Pain of using a Call Center based Mortgage Professional” but, alas, I did not. 

Mortgage Professionals who work in call centers, and in cubicles, in my post-work primarily off of leads. By definition, this means that they are transactional lenders. It’s all, and only, a numbers game. A lead comes in. The lender calls, or answers the call, gets an application going, or doesn’t, it doesn’t matter. They don’t care. If the person on the line is unsure about putting in an application they are either pressured to do so, just put in an application so we can see where you are at, or they are dismissed and hung up on. 

Why does this matter? Well, here’s the rub, if you put in an application and if you provide your social security number and if you click submit if on a website, or simply give someone your social security number you are authorizing them to pull your credit. If someone is worried their credit is too low to qualify and they give someone their social security number then they just approved a hard pull on their credit and its’ associated 4 point cost against their credit score. 

If they were too low to qualify then they are now just that much further away. 

If the call center mortgage professional hangs up to move on to their next lead from this one that will be too much trouble then the interested party is set adrift. They have wasted their time and they have no answers. They are no closer to a home than when they started and they might be discouraged. And this is bad and not fair. 

As I’ve commented already the mortgage process is very complex and borrowers, especially first-time homebuyers and people who might have not gone through the process for an extended period of time, might not be comfortable or familiar with the process. And to simply be dismissed is a disservice. Cubicle and call center mortgage professionals are not incentivized to be mentors and partners through the loan process. They are about volume and production. 

If you love being treated like a number, then click that app or log in to that website recommended by a sports professional. If you’d rather have a partner that works with you every step of the way, find a relationship-based lender. 

There is another important reason why cubicle lenders are a bad loan partner. Availability. Often their hours are set, forty hours a week and not a minute more. If their hours are nine to five and you need them at six-thirty, they won’t be there. If they work Monday through Friday and you need an updated lender letter Sunday evening at seven-fifteen, you are out of luck. Think about when you will be shopping for a home? The days. The times. Are they during business hours? Monday through Friday, nine to five? Or are YOU looking after business hours, after work, on the weekends, etc…? You will want and need to have your lender available during these non-business hours. If you are using an app, a transactional lender, a cubicle lender, or a call center lender you might very well have difficulty getting what you need to put in an offer outside of business hours. And this will be very frustrating. 

Finally, these cubicle, transactional and call-center lenders are paid very little per loan. They have no skin in the game. They have no reason to be available for you when you need them to be available to you. They have no reason to spend more than the bare minimum amount of time on your loan, which, as I’ve already stated, is a very complex process. 

Having someone want to spend as much time is necessary for you to make the best possible decision on what is, most likely, the largest purchase and largest debt in your life to date has huge value. Being reassured that a friendly and interested voice is available to you when you need that answer to what escrows are, to why you need mortgage insurance, to do math about how much to put down on the purchase, and to talk through the numerous products and programs available will always prove to be invaluable. 

Choose wisely. 

 

There’s an old saying; “There’s no such thing as a free lunch.” And although millions of students who get free school lunches might argue, those aren’t free either.

As a lender, I frequently get asked if I can meet a builder’s lender’s incentives. Which, to be clear, are incentives the builder is giving to use their preferred lender. Things like upgraded countertops, free basement, lot upgrades, etc… but none of these are free. I’ll get back to this in a few paragraphs.

How about down payment assistance (sometimes referred to by the initials DPA). These are programs, often government-supported or sponsored, that give a portion of the loan amount as a down payment. Some of these are paid back in the future but at zero percent interest. Hey, isn’t zero percent interest-free? No. Some decrease in the balance due over time, usually 36 months, and when that clock hits zero the down payment assistance no longer has to be paid back. Isn’t that free money? No.

OK, my lender promised me $500, $1,000 or more in lender credits, aren’t those free? No.

Nothing is free.

Builders and lenders often play a shell game with costs, purchase price, loan amounts, and upgrades. It’s very common, that the builder will raise the purchase price of the home by the exact amount of their tremendous incentives. Here’s a real-world example I saw. The borrower was purchasing a home for $529,000. The initial contract was for $529,000. The buyer added $30,000 in upgrades, granite countertops, better appliances, etc… bringing the actual purchase price to $559,000. The builder offered $15,000 in discounts and incentives to use their lender. The borrower was specifically told they would not be charged any points, prepaid interest, on their awesome rate. At closing the borrower had to pay $5,590 in points, 1%, and they were informed their purchase price had to be raised to $574,000. So, the borrower not only didn’t get ANY discounts or incentives, they ended up paying $15,000 more for the home plus $5,590 in points for a total swing of $35,590 more than they should have. There were no incentives. The builder just made more. Those $30,000 in free money incentives ended up costing the buyers a total of $35,590. Which, in my book, is money not well spent.

How about the down payment assistance programs. Those are completely free money. They aren’t. Most of them require a 1% origination fee just for doing the program. If you use the previous numbers, just because they are valid home expense numbers, if the borrower had used down payment assistance there would have been an additional $5,740 origination fee. Additionally, virtually all down payment assistance programs, have higher interest rates. Sometimes only slightly, but sometimes tremendously. It depends on the program.

Now, I’m not talking smack about DPA. These are great programs that can get people who otherwise can afford a home but don’t have enough for a down payment to become homeowners. I’m just saying the money isn’t free and there are costs associated with these programs. If it is possible to not use ‘free’ money you should. It’s almost always in the borrower’s best interest to do things on their own.

Finally, lender credits. These are free right? Well, no. Just because the borrower doesn’t see the expense, the lender often does. Often these credits come out of your personal lender’s commission. Sometimes they are branch concessions and sometimes they are company concessions. Regardless someone has to pay for your free money.

My advice is to get all the costs, fees, and information associated with your mortgage and find a personal lender you can trust! Someone who is transparent and honest.

In this day and age of instant online offers to sell your home with no listing fee, no open houses, no showings, and no interruption to your daily life it seems like realtors should fear for their jobs. Well, no.
OK, part of this is accurate. Those realtors that charge a full commission to do nothing other than slap up a sign and put your home on the MLS should very much live in fear. Those production only with no relationship-building realtors should be very fearful. Better realtors and progress are coming from your lazy money.
I once had a realtor tell me that if you spend more than 4 hours listing a home, meaning actual work on a listing, you are doing it wrong. For the privilege, if this four hours this realtor is saying their knowledge, time and effort are worth 3.2% (common in Colorado) to list your home. How much is this? Well if your home sells for $525,000 that four-hour or less realtor is making at least $17,600 or $4,400 per hour. Awesome work if you can get it, but this approach, and attitude, gives all realtors a bad name.
A good listing agent, and I know more than a few, will spend countless hours on your listing. From the initial walk-through to small touch-up advice, to staging your property, doing open houses, and, in our market, summarizing possibly dozens of offers down to the top ones for you, and your family, to choose from. This isn’t even to mention the hours of work running comps (pricing on comparably sold homes to get you the best possible price).
Why is their time and experience so valuable and worth so much of your equity? Well, because here’s what the instant offer websites do instead of a proper agent.
They also pull comps on your property. They proceed to offer you 5-10% below market value for the convenience of not putting your home on the market. You will also be required to do any, and all required updates or repairs that they deem necessary. They do the repairs, at their chosen costs and reduce your offer price even further. It is not uncommon for, once all is said and done, for your discount no-interruption to your daily life sale of your home to put 7-15% less cash in your pocket when all is said and done. They then turn around and sell your property for 15-20% or more than they finally paid you. Yes, you didn’t have any open houses or showings. Of course, it was more convenient and less intrusive, but good golly. Your home that a listing agent would have sold for $525,000 with you walking away with $488,250 (6% to buyers agent and listing agent and 1% for title work that the seller pays for). $446,250 (15%). I don’t know about you but having strangers wander through my home is worth 8% more in my pocket.
You see a good realtor knows the area. They know how to market your home. They may already have buyers lined up. They certainly know other realtors to reach out to and, most importantly, you can trust what they say. You can call them virtually any time and they are there 100% for you and your family. Their experience and knowledge is worth every penny.
Finally, and remember this, nothing you pay them is cash out of their pocket. If they don’t sell your home they don’t get paid a nickel for all the time and effort they put in on your behalf. They get paid when you get paid. They have your best interest at heart and will go through every contract, every offer, and every document with you word by word if you desire. There is nobody to review your online offer or cut-rate service contracts. You are on your own and trust me when selling your most valuable asset, you don’t want to be on your own.

 

Let’s be honest here. Buying a home, be it a condo, a townhome, or a single-family home, is one of the most complex financial processes the average American will partake in during their lifetime. Not only is it complex, but it requires a great deal of teamwork to make it all work. There are lenders and mortgage professionals out there spouting about their simple process, their app-based process, their cookie-cutter process.

Don’t believe a word. Don’t believe the commercial on TV. Don’t believe the web banner ad. Don’t believe what you hear on the radio or in print or from anyone who represents these ‘simplified’ mortgage processes. This process is not, and, most likely, will never be a simple process. Let’s do a run-through, shall we?

For this discussion, I’m going to leave out the real estate aspects of the process and focus only on the mortgage loan application, qualification, and approval process.

You must have your credit pulled and this hard pull will have an effect on your credit score. It can have a huge negative effect on your score if you are denied a mortgage for credit purposes. As such it’s always good to have an idea as to where your credit stands. This, general, information can be obtained via a credit card score report, a credit score app, or a website like Credit Karma, or by contacting the credit bureaus and obtaining your credit report directly, which you can do once a year at no cost. These scores will rarely be accurate in regards to the mortgage scoring system used by mortgage lenders. Be prepared to be surprised at where your score comes in at. An honest and transparent lender should help guide and educate you along these lines.

You must provide verification of employment, yes your employer will be contacted, and if you don’t want your employer to know you are buying a home then you should stop before you start. Lenders have to verify your employment history, going back a minimum of two years. Prepare to be asked for your previous employers’ contact information and, possibly, for previous, or your current, employer to reach out to you to make sure the request is valid.

You must provide two years of residential history. You will need to provide contact information to verify your residential history as well. This can be mom and dad, landlords from previous rentals, or the leasing companies of previous rentals.

And then there’s the documentation. Thirty days of pay stubs, 60 days of bank statements, most recent retirement, investment, 401k, or pension statements. Copies of your drivers’ licenses. Two years of W2’s and/or 1099’s depending on how you get paid. And if you are self-employed be prepared to provide balance sheets, profit and loss statements, Schedule C’s, K1’s, and, probably, your complete tax returns. As well as CPA/Accountant contact for the verification of employment.

Finally, the number of actual human people involved, no matter the lender, no matter the app, no matter the ‘easy one click’ mortgage or ‘simple’ loan process, the number of eyes that will work on your mortgage is nowhere close to the automated zero some lenders would have you believe. In addition to a loan officer, or loan originator, there might, and probably will be, a processor, underwriter, loan assistant, appraiser, appraisal management company, title rep, escrow officer, insurance agent, quality assurance review, auditor, branch manager, etc…

With all of these people, processes, and documentation involved and required, the mortgage loan process can be very complicated. To make the process feel simpler requires a personal touch that only a professionally licensed loan officer can provide. The relationship and high touch approach CAN and WILL make a complex process seem easier than it is, but no bank or lender has a patent or appropriate training to teach customer service and personality.

Find someone you trust and get a referral to an experienced loan officer. You will not regret it.

If you are looking for just such a lending partner don’t hesitate to reach out to me via this form!