"do you understand . . ."

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It is interesting how consumers (have to) approach the mortgage process. 

I see my role in the process as one of providing advice.  I want to make sure that I help people get the type of mortgage financing that is best for them (based on their payment needs, qualifying issues, etc).  For obvious reasons, that process involves me giving them a lot of information and numbers as to their options.  And because loan programs and financing options are constantly changing, I try to take my clients through a short interview process to find out about their financial goals and objectives.  It is really just simple sales strategy . . . ask questions, listen to what the customer needs and wants, then present solutions to compliment those needs and satisfy the wants. 

Generally speaking, from a consumer’s vantage, there is a growing skepticism of mortgage brokers.  When you take that initial cynicism and add it to all of the ‘other voices’ in the mix of getting mortgage advice — well-meaning fathers, over-protective mothers, financial planners, talk-radio personalities, uncles-that-used-to-be-in-real-estate, neighbors who just got a so-and-so type loan, all the way down to the co-worker who claims he got ‘rooked’ into a terrible loan that has a high interest-rate with a big pre-payment penalty (which he blames mostly on the loan officer, forgetting to tell you that at the time he got the loan he had a 500 credit score – not good — no money to put down, and had recently had his car repossessed) — add all that noise to the mix of trying to get a mortgage, and at times, my advice becomes another voice in the crowd. 

I think some consumers have the perception that maybe mortgage brokers have some hidden agenda — like a car salesman (the analogy hurts, it does), in that I might make more commission if I sell a customer an adjustable rate mortgage instead of a 30 year fixed rate mortgage.  As if I were to say (slick hair and bad suit) “What can I do Mr. and Mrs. Smith to get you into a 1 month MTA-loan today?”  Some of the industry’s reputation is likely deserved (bad apples).  I spoke to a past client who had just received a phone call from a telemarketer trying to sell them on a 2nd mortgage.  He has great credit and a good equity position in the house and the telemarketer offered him a second mortgage at 12%!!  After he gasped and told her that the rate was terrible, she immediately changed her quote to 9.75% . . . a few comments later, down to 8.9%.  For perspective, he and I talked about a possible second mortgage at 7.25%.  All that to say, some of the skepticism (and maybe even the car-salesman analogy, ouch again) is probably justified.

Just so you know, from my perspective, I have no preference what type of loan someone chooses.  I make about the same commission regardless of the type of loan a client chooses. 

Being one of many “voices” in the crowd, I do my best to educate my clients, present all of their options and them let them choose the option that best suits what they need (and what they want).  Sometimes the whole situation makes me laugh.  I was speaking with a client about his options and mentioned the idea of an interest-only mortgage.  He was putting a sizeable downpayment on the property and was mainly getting the mortgage to pay some tax deductible mortgage interest — a great person to consider an interest-only option mortgage.  “No, not interested.  Not at all.  Not interested in any kind of adjustable rate mortgage.”  I can respect that (being conservative).  So I gave him a few highlights on an interest-only ARM and why it might be something for him to consider, but we quickly moved on to talk of 15 and 30 year fixed rate mortgages. 

The next day, the phone rings.  “Jeffrey, I talked with someone yesterday who says that I should consider an interest-only mortgage.  Do you offer those types of loans?”  ha.  You just have to smile and laugh a little.

pic_tucker3.jpg

“Do you understand the words that are coming out of my mouth!?”

aside: did I just think (and post) that Chris Tucker thing out loud (in writing)?  Oops. 

So my advice . . . be open to advice.  The mortgage industry is constantly changing and new programs are constantly being added to the market — find out your options, ask a lot of questions, crunch the numbers and then do your homework.  Secondly, weigh your advice.  In other words, your parents, who have only been through the mortgage process three times in their entire lives, or your uncle who did mortgages 25 years ago, or your neighbor who just bought the latest mid-night infommercial real-estate DVD, may not be the best source of information when it comes to getting a mortgage.  Is it good to get their advice? sure (except for the neighbor, maybe); but to follow it?  Well  . . .  along with the counsel of your mortgage consultant/mortgage broker/loan officer/mortgage guy . . . that’s for you to decide.      

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One Response to “"do you understand . . ."”

  1. Mimi Says:

    You obviously had a wonderful mother to raise such a smart son!

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