Businessman blurting by phone (focus on the man)
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(2 minute read)
The single biggest financing / liability / lots-of-interest-paid-over-time decision many people make, is choosing a mortgage lender when buying or refinancing their home. So how do you do that?
There is certainly no shortage of choices when it comes to lenders, mortgage financing products, pricing options, referrals, web based virtual interfacing, rate locking, rate quoting, closing costs estimates and on and on. Even the chemistry vibe with a lender rep can be a factor and when taken altogether, it makes for a swirling vortex of information which may be difficult to distill into a best possible decision.
And everybody has a “guy” (this is a gender neutral term), that is the best in the business, will get you a great rate and that you absolutely have to talk to. Your friends, your spouse’s friends, your real estate agent, your attorney, the guy at the deli, your brother, everybody has a “guy” (more gender neutrality), that you need to talk to. So which one do you pick? Of all of the people in your universe who have a “guy,” whose opinion do you trust the most? Start there, remember, this person, in fact, all of these people have already been through what you are about to do, they have vetted their “guy,” and they have their experience to share. There is no better place to start than here.
Of course the lure of the great interweb and all forms of virtual and electronic messaging will add lender options to be explored. Start with a big list and narrow your financing targets to a universe that you can manageably follow-up with regularly, to measure competitive consistency. Every lender will offer the lowest rates, fees and closing costs available. Just ask them, they’ll swear it’s true. Average rates and high closing costs will never be part of the pitch.
Rate shopping can be seductive but contrary to popular belief, it is not a surefire method to scoring the best deal on your mortgage financing. In fact, rate shopping can be fraught with peril and lots of sounds-too-good-to-be-true information, so caveat emptor. The mortgage industry is uber competitive, profit margins and costs are carefully managed and rates and fees may vary narrowly at best.
Once you have distilled your mortgage lender search to a short list of well vetted finalists, call each one and see what you can do for each other. Offer advocacy and endorsement; let it be known that you will actively refer people in your universe whenever the opportunity arises. Take the time to thank whoever referred you to the lender rep and let the rep know you did that. Leverage the relationship of the referral source that connected you in the first place. Then ask if there is any room to do better on the interest rate being offered or if any of the fees can be negotiated. You will be surprised at what can be done.
Relying on rates and fees quoted in a preliminary phone conversation with someone who may or may not have much vested interest in your financial well-being, may not be a strategy with sound footing. When you work with someone you were referred to, there is some earned faith and trust, as well as some level of a relationship at stake. You have leverage and you should use it.
And lastly, there is a difference between analysis and over-analysis, one involves a decision, the other does not. You may think you made a decision, but if you are second guessing, you are still analyzing. Break down your top choices into a quantitative comparison, stir in the qualitative differences and close out your decision.
And then be done with the deciding phase and get on with the mortgage getting process.