How Not to Miss a Good Loan
I recently was working with a potential client that was looking to do a fixed second mortgage. Like most people I talk to, they were “shopping” around to get the best deal. They wanted to find the best deal but they had one major problem: They’ve been overloaded with information so that when that deal came…they passed on it.
The age of the internet has been a big benefit to everyone as there is information on mortgages and every other topic you can think of. The problem is there is too much mortgage information and if you don’t know how to use this mortgage information, you could loose out. Back to the story. I quoted them an interest rate that was competitive from a major national bank. They came back and said they found a slightly lower rate and asked if I could do better. I searched some more and found another major bank offering a lower rate for the same program. I quoted the rate (which ended up lower than the quote I was competing against) and they we’re happy with the reduced terms. The next morning the bank announced they were offering they’re preferred brokers a 50 basis point off (.50%) reduction in rate. Now at this point I can do one of two things: 1) Keep the rate where it is and make more money on the loan 2) Or pass on the savings to the client.
I chose option number 2. I sent them an email advising them of the lower rate and how we needed to move forward as the lowered rate might not be around in a few days. What happened next surprised me. I received multiple emails asking how can this be done, is this really true etc., etc. etc. I answered all their questions to the best of my ability and at the end of the day guess what they did? Canceled the loan. It’s like going to buy a car and when the deal gets the paper work ready and says, we’ll lower the price $5,000.00 more dollars for you as the manufacture is offering a discount right now and you end up saying “no thank you”, walk out the door saying “we’ll go else where to pay the higher price”.
Sounds crazy right? But it actually happened. And truth of the matter is it’s not their fault. Why did they end up making this wrong decision? They had too much information and did not know how to use it. They claimed that rate did not exist because they were “tracking” interest rates and didn’t see any reduction. This is how I responded to that:
Be careful of "tracking" rates as for every survey you find about what interest rates are doing I can find another showing a different trend. The reason? Not all lenders participate in these rate tracking survey's and the ones that do, participate in different ones. Furthermore, banks have retail and wholesale rates. Most banks do not advertise these wholesale rates. If they did no one would apply with their retail division. Banks will also discount even further these wholesale rates depending on the relationship the broker has with them.
I suggested that they work with 3-5 local banks as their needs will be better served that way. This is what you need to do to ensure you receive the best deal: 1. It is vital and necessary to obtain information on any new mortgage you are about to take on. 2. Receive 3-5 loan quotes from loan officers who have your completed loan application. 3. Ask a lot of questions, I further encourage my clients to research the internet for mortgage information, and ask even more questions. But what you need to be careful of is not to forget to ask questions and two; be careful not to get lost with all this information and 3; ask more questions.
Kevin O’Connor
Mortgage Consultant
http://www.koloans.com/
800.550.5538
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