I Agree, Mortgages Are The Worst
Lets be honest. Mortgages are the worst. Nobody likes having one; few people enjoy even talking about them; heck, people throw elaborate parties when they finally pay them off. Unfortunately, most people need a mortgage at some point in their lives but dont know anything about them until its time to apply for one. Why did California schools require me to sit through years and years of History and English classes but not one semester that taught me about mortgages? Our world is so polluted with news and articles about mortgages that its hard to know which website, company, or friend-of-a-friend is telling the truth. Chances are that the guy who wrote that article or told you that thing
about mortgages that most people dont know doesnt even understand our industry himself.
Since I took the leap into the mortgage industry, I have had the privilege of holding nearly every mortgage-related position out there. Ive been the salesman on the phone, Ive processed loans, Ive built training programs, Ive managed a mortgage banks operations department, and I have worked on the back-end or secondary side of the business as well. It goes without saying that this has given me a well-rounded perspective and insight on the mortgage industry. Had I not found myself knee-deep in the industry, I would have been scared out of my mind to apply for a mortgage. Im mostly thankful for the knowledge Ive gained because I can help my friends and family navigate through the fog that sits on the mortgage industry.
It seems like I have friends or acquaintances of some sort that ask me questions about mortgages every day. I love being the go-to guy, but I am frustrated (and somewhat shocked) when I listen to what their understanding of everything is. Here are a few of the basics:
- No, you dont need 20% down payment to get in a house
- No, all mortgages arent 30 year fixed loans
- Yes, your credit score has a lot to do with your mortgage rates
- Yes, there are hundreds of unique loan products and scenarios out there
- Yes, the first step should be getting pre-qualified, not going house shopping
- No, dont try to learn about mortgages from Google or YouTube.
Another question Im asked somewhat frequently is, why would anyone get their mortgage through a boutique mortgage bank and not through Wells Fargo, Chase, or the other big guys? In one word: options. Mortgage transactions, both refinances and purchases, are often moving targets.
Lets say you apply with one of the big banks for a loan, they pull your credit report, they ask some questions and figure out how much money you make, and they give you a pre-approval. What if your appraisal comes in at a value $5,000 lower than what you expected and you no longer fit perfectly in the big banks box? They kick you to the curb and start working on the next clients deal while a smaller, more service-oriented boutique bank would re-route your loan from one investor to another seamlessly. No time is lost on the transaction and nobody is on the hook for another $500 appraisal.
The final piece of advice I want to lend is that everyone should treat a mortgage transaction as a team event. Realtors are experts at selling and buying homes; lenders are experts at originating mortgages. Your lender should let your realtor do his/her job and vice versa. If you, your realtor, and your loan officer are familiar with one another and are on the same page, I can guarantee that your transaction will go smoother. As I briefly mentioned earlier, setting up a game plan before going out on a Sunday to look at houses is crucial. To set up a game plan, Id ask your realtor and your lender to sit down for a quick meeting and have them guide you through what to expect throughout the process.