One of the things that has always bothered me about this business is the errors that borrowers make. Not only do they do them over and over again, it's hard to dissuade them from their unsuccessful practices. I am writing this because if you are think you might be guilty of any one of them, I want you to consider getting better educated about the process.
I got a call the other day from a borrower. He didn't get my name from a friend and he didn't know about my books. He just found my web site.
First, this borrower asked me for a quote. Now I don't quote people who are not clients for one simple purpose: If they are asking me for rates, they are asking others too. What's the problem? If they call enough people, they will find someone who will lie to them. The liars always have better rates than those who tell the truth. Giving him pricing just makes the liars look better, and that is not helping him at all
Second, I'm a person who believes that experience, trustworthiness, and integrity are the most important qualities a borrower should be looking for. So I offered some references in his area for him to check out, but he said he couldn't be bothered by doing that. To be honest, there are a number of scumbags in my business and they have honed their sales pitches and they sound great. Do you really think that a scumbag will get you a better deal than an honest person? I'll be he thinks he can tell a scumbag on the phone! NOT!
Third, he was seeking a quote on the most expensive product our industry offers, a Jumbo 30 year fixed rate mortgage. 99% of people want something less expensive, not the most expensive. Frankly, there is probably another, cheaper product that would meet his risk tolerance coefficient, but he didn't want to hear about it.
Fourth, he didn't want to pay points. Most people don't realize this, but paying points is the only good thing about the loan process. You can actually make a 25% profit on your money. He didn't realize that and didn't seem to want to listen either.
Fifth, although his deal doesn't close for 3 months, he wanted to lock in today. I'm no prophet, but I'd bet that rates would vary enough so that somewhere along the line, he'd wish that he hadn't locked so soon. This guy had been a stockbroker for 20 years so he did have enough financial acumen to be a little more opportunistic about interest rates than, "Just lock it in today regardless of what the rates are."
Last, I suggested that he wold benefit from the knowledge contained in my book but he responded, "I don't have time to read books."
I didn't make this up. This really happened. While I've met lots of people who made one of these mistakes, I don't think I've ever met someone who made them all! This guy is looking for a $500,000 loan too so even being a little bit smarter would save him tens of thousands of dollars.
Frankly, with that attitude, I don't even want him as a client. I think that he'd be just as happy dealing with some doofus at a "call center" who makes $7 per hour. Of course, he might even be happy at closing. He'd be one of those guys about whom is said:
When ignorance is bliss, 'tis folly to be wise."
Randy Johnson Independence Mortgage Company, 1601 Dove Street Suite 181, Newport Beach, CA, 92660
(949)-852-8822 Fax (949)-852-0441 Updated 7-5-02

Copyright 1999 Independence Mortgage Company