What You Need To Know That Your Lender Won’t Tell You

One of my clients (we’ll call him Bill), was working with another real estate agent, who strongly directed him to a particular mortgage company (one, I may add, that doesn’t have a sterling reputation among my peers).  That lender told him that, because of peculiarities in Bill’s income, he would only be able to qualify for one type of loan and that Bill had to settle quickly, because the loan would probably not be available for very long.

Oh yeah, and this guy was the only lender to offer it.

Bill fired his agent and came to me a couple of weeks ago, under a lot of pressure to find and settle on a house by the end of April — he just had this one chance to buy and he didn’t want to lose the opportunity that this loan presented.

These facts sounded pretty fishy to me, but Bill was adamant. He had to use this lender or he couldn’t buy a house. It took me a while, but I finally convinced him to call several other reputable lenders, and a miracle happened!

Bill was pre-approved by all three lenders that he called! And at a much much better interest rate! Did I say MUCH better?

Most lenders get their money from the same places — other banks. Lenders buy the money they lend, then they lend it to consumers at a profit. Most lenders have the same loan programs available to them. There are a few specialty programs out there. I remember when I was in the mortgage lending business, back in the 1980s, and B.F. Saul (Chevy Chase Bank) lent its own money and made up its own guidelines. We called it B.F. Saul Funny Money. You had to go to B.F. Saul to get that loan. But for the most part, it pays to shop around.

I strongly recommend David Reed’s book “Mortgage Confidential: What You Need To Know That Your Lender Won’t Tell You”. Even after my years in the industry, I learned a lot from this very easy-to-read book. He explains exactly how to shop for a mortgage — why most of us do it incorrectly. Definitely a worthwhile book to pick up.

And Bill? He’s getting a great mortgage, the pressure is off, and we should have an answer back on our offer today. Fingers crossed, he’ll be in his new home by mid-May.

© 2007 Susan Pruden.

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