Getting a mortgage is easy, right? You apply for the loan, you send in some paperwork, someone appraises the home, if your credit is OK, a little bit later you get a mortgage. Right? It should be that easy, I agree. We have the technology and desire in place to make the mortgage process easy, I believe. But getting a mortgage has become the most arcane, complicated, minutia filled experience ever. It is worse than going to the Department of Motor Vehicles, by far.
The rules are dense
The government has placed themselves in between the consumer the the lenders, and created havoc with rules you would not believe. I’d have to write a book to explain all of that to you. For now, trust me, the process is absurd and you should shop execution over price. So for the most complicated financial transaction we take on, why do we insist on shopping all over the place as if we are buying a stuffed toy for a child’s birthday? Why do we treat a complicated transaction like a commodity? Why do we shop price first; and service, reputation and reliability last? I don’t know. It is astonishing to me, and I can’t explain it.
Below is an exchange that may help educate those looking to shop by price. These are literally all the notes and conversations copied straight out of my database, from a recent mishap a client suffered.
A real story
The story needs no explanation or summary, just read it all the way through:
Brian, we are thinking of refinancing, again. You helped us with the loan to purchase the place and our last refinance. So I wanted to check in with you and see if we should do it again.
Yes, it looks like you can save over $320 a month. I think it is wise to do it again. The recapture period on the closing costs is only 11 months, which is pretty good since you believe that you will live there for 10 more years. The rate is 3.625% with 0 points. I think you recall how to get the process started from the last time? Let me know if you have any other questions.
Brian, we checked online, and there was a lender in North Carolina that had a little better rate. Can you match that rate?
No, we cannot match rates, especially not from an out of state online lender. There are a myriad of problems with those sorts of lenders involving delays, lack of responsiveness, appraisal problems, and underwriting hassles since they do not know our local marketplace. The transaction has become so complicated, there are really a lot of other factors to ask them about. Did you ask about their closing costs, turn times, how they’ll source a local appraiser, where they do their underwriting, etc.
Three months later:
Client: Brian – you were dead on. Their business model may never make sense. The run around, lack of one person who is the point of contact, poor communication, and seeming inability to process information is infuriating. The refinance is trickling along and has been way too long. I am honestly ready to pull the plug on them as I don’t feel comfortable that the loan documents won’t have some major screw ups costing me down the road. I have serious egg on my face and should have listened to you. I got too caught up in shopping and trying to save a few bucks. In any event, happy to write a “lessons learned” for your website and also interested in the current rates that you have access to. These people do not deserve the business, and I am ready to start over with you.