Friday, April 12, 2019

Not all lenders are created equal

Don't be fooled by adverts for this rate or that lack of fees or any other puffed up marketing baloney. The overwhelming majority of lenders are all selling their loans to one of two primary entities and the actual real world difference in pricing and costs between them is typically benign. The real difference is the people working behind the scenes to get your loan closed.

There are so many crappy lending companies just churning paper as fast as possible leaving many borrowers in the wake of doom. A good loan officer will spot potential problems well in advance and reduce the chance of a catastrophic failure (that's where you get to the end of the process and then don't close). If the loan officer is giving you the hard close, you probably should find a different lender.

The lender that gives you a pre-qual letter without running your credit and getting some supporting documents from you is not helping you. In the end the underwriter will sniff out every detail and if there is any omissions or items that don't fit the lender's guideline they will abruptly kick you to the curb. They don't care about the $400 you spent on an inspection or the $800 you coughed up for an appraisal, nor will you get that money back if they can't close the loan. The rates and fees and such have all fallen pretty closely together since the major lending overhaul in 2011. Don't be lured in by the rate barkers. 

Loans are complicated. There are a great many ways to show a lower rate that really isn't lower at all. A 4.5% loan with 2 points of upfront fee is probably not as good a deal as 4.75% with no points. And 2 points for a 1/4 point rate reduction is too much. Most people don't know what a fair buydown is, and it is a moving target that ebbs with the economic conditions. But for many people that 4.5% looks good. In reality a $100,000 loan at 4.5% is $507 a month and at 4.75% it's $522 a month. That's $15 a month difference. Now if you stay in the loan to the very end you will come out ahead, in fact the 2 points on 100k is $2000 you come out ahead after about 11 years. The average mortgage loan however only makes it to about 7 years before refinancing or selling the house. So unless you are staying in the loan for a long, long, time the seemingly lower rate may not be lower at all.

So don't fall for the gimmicks and the sleazy ads, find someone who will actually look at what is best for your specific scenario. That person will also very likely be mindful of the potential pitfalls in the process and guide you through to a successful close. The loan is the most complicated part of the deal, despite what some real estate agents might think, you know... the ones that think they are the center of the universe. Unless the buyer has a wheelbarrow full of cash, or seriously heavy bank accounts, the loan is the heart of the deal. The loan officer is the most important person in the room.

I have found a few really solid, honest, and hard working lenders locally in Vancouver, WA over the years including:

Mike Roy, Pinnacle Capital, 360-798-8339

Elione Miller, Security National Mortgage 503-577-1974

Tom Clark, Guild Mortgage, 971-409-5750

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