One day, you are interested in getting a loan. His plan is simple: Call several lenders and see who has the lowest rate. You call the first lender. He asks her when she plans to get her loan. You tell him in a couple of months. He gives you a low rate quote. And, after several calls, he discovers that the first lender he called has the lowest rate. When the time comes, you know who you’ll use.
Now fast forward a few months. You call the first lender. His rate is a bit higher than the last time you talked to him. He tells you that the rates have gone up a bit. He even invites you to take a look. Why do that? After all, he had the lowest rate quote when he did his first rate search. You get your loan and everything is fine, right?
Wrong! This lender used a trick that has become an obscure part of the mortgage business. You see, the first lender you called knew he wouldn’t get your loan for a couple of months, so they quoted you a rate well below what’s likely to be available to you. After checking it out, he found that his quote was the best. Surprise! You KNOW you have the “lowest” rates because you had the “lowest” rate quote the last time he called you. Actually, this technique is taught by unscrupulous trainers, and in my opinion, it’s embarrassing!
Here’s another trick:
You call a lender, get a rate quote, even meet with them and fill out a loan application with the quoted rate shown on your package. Time passes, your loan process continues, and now you are ready to sign the loan documents. When you arrive at the trust, pen in hand, you discover that his excellent rate is much higher than you were led to believe. The explanation: your program got a little more expensive, the fees went up, or whatever. If you want the rate you were quoted, you’ll have to pay a couple more discount points to get it. For those of you who don’t know, one discount point is equal to 1 percent of the loan amount. Nice, huh?
There are so many scams a dishonest lender can do to you; I would need a book to discuss them all! You can definitely be a sitting duck for a lender who has your technique low. But what do you do to protect yourself?
Easy! Don’t just jump at the lowest rate quoted for you. Heck, anyone can quote a low rate! But if it is not possible, what is the use of the quote? More important than the fee, you need to know who you’re dealing with. Research the lender before using them. Get referrals from friends and family based on their actual use of the lender, not based on what they heard or the lender’s polished ads.
Another great source (and my favorite of course!) is your real estate agent. That is, if your agent is someone you can really trust. Agents work regularly with lenders, and these lenders know that if they don’t deliver, they better never set foot in that agent’s parking lot again, let alone their office. But make sure your agent actually has first-hand knowledge of the lender. Have you worked with him? How is he with customers? Is he honest and truthful… even if it’s bad news? How timely is he? How are the costs of it? These are important things to know.
Also, be open to someone being honest with you. Don’t look for the answer that makes you feel good. Sometimes honesty hurts! If you look for that “good” answer, a less than honest lender will pick up on it and have you on the hook!
Remember, your real estate agent is not only working for your business, but also for your family’s business, your friend’s business, everything. You would definitely want to make sure you work with quality people who will take as good care of you as he would. I know that’s my philosophy.