Have you ever not thought ahead, and then found yourself marooned? I found myself thinking of this as a friend of mine was complaining about a roof leak he had that was causing massive damage to his bedroom. Not only does he need a major roof repair, he now has drywall, carpet, subfloor and furniture damage in his bedroom from the leaking water. He was complaining that when he bought the place 3 years ago that he used a roofer to do repairs, and after a home inspector recently told him those original repairs were done incorrectly, my friend is angry at the roofer. But is it solely the roofer’s fault? I remember when my friend was shopping for a roofer when he bought this home, all he talked about was price, and no discussion was had around experience, materials, efficiency, referrals from other clients, etc. To me, since my friend solely shopped by price, he is now marooned in his own house and its partly his fault. He was looking to cut corners, and is now paying the price.
The segue to the mortgage world comes courtesy of a recent client of mine. Four weeks ago he shared that he was going to choose an online lender, because their rate was 1/8% lower than mine. He had to close his loan in just three weeks, which is very fast in the mortgage industry. I explained that an online lender likely could not move that quickly, would use an appraiser that was not local who possibly under appraise the home and potentially void the sales contract, and could cause other problems. Not all loans go awry at online lenders, but enough that Realtors never refer an online lender, and get upset when a client uses one. So I was not using scare tactics, I was just explaining the facts as I have lived and seen them.
He ended up applying with us as well as the online lender. While this is not fair to one party that will do the work and not get paid, and I usually do not engage in this sort of thing, I decided to proceed with him as a client. At the end of 3 weeks we had the loan approved, and were ready to go to settlement. We had three loan approval conditions, and I had contacted him 3 times a week with updates as to the loan status. The online lender got their loan approved 4 days after we did, had 15 loan approval conditions, and only updated him twice when he called them to see what was going on. He said their laundry list of loan approval conditions was so complicated he was not sure he could meet them, and that he was happy he had me to fall back on.
Oh, and it turns out our rate ended up being 1/8% lower, for some reason related to the buyer’s credit scores and debt ratios (which were both excellent in my opinion) during the processing of the loan the online lender said they could not meet their original rate quote and had to raise their interest rate quote by .25%.
The moral of this story is to think ahead, ask a lot of questions, have doubt, realize not everyone delivers what they promise, and there is no free lunch. There is a reason some service providers have a lower price, that reduction in price has to come from somewhere, and it comes from reducing service that may end up being critical.