Discouraging isn’t it? That sort of thing can easily happen in the mortgage arena. I’ve refinanced my own mortgage twice and each time interest rates were a little better either before or after I locked my loan. That can be disappointing, but it’s usually unavoidable due to the cyclical nature of interest rates; so I didn’t lose any sleep over it.
Another way it can happen is if you lock an interest rate and then see an advertisement for a better rate elsewhere. That shouldn’t frustrate you though as the interest rate quoted may be “no longer available” (if it ever was); you may not have qualified for that better rate anyway; and that other lender may be advertising cheap rates because no one will refer business to them because they’re totally incompetent (typically you get what you pay for).
In my newsletter dated Jan 20 (you can reference all of them by clicking on the image of our website to the left) I discussed the inadequacies of the new Good Faith Estimate(GFE). In addition to other things I mentioned the section regarding shopping for the “best loan”. The worst part of this “shopping” section is that it only mentions “best loan” without talking at all about the suitability of different financing for your specific situation. There has been a concern about Mortgage Originators placing people in the loan that pays them the highest commission. This new GFE does nothing about that. It only encourages you to shop for the lowest rate on what could be the worst loan for your situation! Let me explain how you can get taken to the cleaners and be justifiably discouraged, even angry!
Currently in Okaloosa county Florida where most of our lending is done there is a no down payment mortgage available commonly referred to as a “Rural Housing loan”. This loan is fantastic but is only available to people with incomes below a certain level. The big secret is I can make more money on a VA loan (also no down payment). It’s more profitable for me to never even mention the Rural Housing loan and instead sell you on the benefits of the VA loan. Then if you follow the advice on the new GFE you’ll call around and get estimates from several lenders for a VA loan; all the while totally excluding the Rural Housing loan which is cheaper and has other associated benefits not available with the VA loan.
That’s my biggest complaint with the new GFE. The Federal government (in all it’s wisdom) didn’t take “suitability” into account. In fact, very few borrowers even think to ask “is this the best loan for my specific financial situation?” And to make matters worse, many Realtors don’t think about suitability either and instead only encourage their client to call around for the lowest rate; and that could be the lowest rate on the worst loan. Is that really helpful? It’s maddening for people like me.
At the Baker and Lindsey Niceville Office we’ve spent time and money on training and software to be sure our clients are getting the best loan for their situation. If you call us thinking you already know the best loan, we’ll ask you why you chose that one. Then we’ll provide a Total Cost Analysis that will take all the guesswork out of the decision. That’s how we define “a professional approach”. We make the investment to make sure you get what’s best for you, not the other way around!