I lost a client recently, mostly because she was a price shopper, and would not answer my questions. And then I heard from her again, mostly because she was a price shopper, and would not answer my questions! Confused? I was too. It has to do with currencies, underwriting rules, foreign countries and more. Sounds mysterious. I’ll explain.
A client called me shopping for rates. Right from the start I am concerned when someone is “shopping rates” and is not “shopping for an experienced mortgage lender.” You may as well say you are shopping for filet mignon but looking for hamburger prices. I knew I was in for a treat. I started to ask my questions that I need to know in order to accurately help people, and bring my 26 years of experience to bear, while delivering excellent service, accurate data, all at a competitive price. Sounds impossible…I know. But I do it. Here is how it went:
Client: Hi, I want to know your best rates.
Me: Thank you for the inquiry, I am happy to help you. Can you tell me the price of the place you have bought, and the down payment you have?
Client: I just want to know your best rates.
Me: I understand, but I cannot quote you accurate rates, and cannot assure I can get you to settlement on time, until I ask many questions.
Client: I am buying a place for $400,000 and I want to put 20% down. What are your best rates?
Me: Thank you, this is a good start, I need to know many more things. Can you tell me about your credit score, what date do you need to go to settlement by, what type of property are you buying, and I’ll need to know about your income, assets and debts.
Client: Why is this so hard? I just want to know what your best rates are.
Me: I understand, but there are a lot of data points that go into pricing a loan, and Fannie Mae, Freddie Mac, FHA and all the banks all price loans differently based on your credit score, property type, number of days you need to lock-in the loan, and much more. Let’s put that aside and talk about your qualifications for a minute. What is your current income and where is your down payment coming from?
Click. Hello? Dial tone……hello? Is anyone there? Oh…she hung up. She didn’t actually, but it makes the story sound better. She actually did hang up abruptly later in the conversation, but did say goodbye. I believe before she hung up she muttered something and put a curse on me. Now I walk with a limp and have back pain.
And who would imagine what happened next? Oddly enough, I got an email from the client’s Realtor three weeks later. It went as follows:
Realtor: Brian, my client decided to work with a big bank because of the rate they offered her, it seemed lower than others she heard. However, there is a problem. She is putting 20% down on a Conventional loan, and some of the funds are being transferred from her account in Colombia to a USA account, and it turns out their underwriter informed them that if the funds are coming from out of the country, they have to have been in her USA account for a minimum of 6 months…not just recently transferred. So now they are offering her an FHA loan instead, where the rules are different and allow her to use recently transferred funds. She prefers to do a Conventional loan, because the PMI cost on the FHA loan is outrageous, and her 20% down Conventional loan has no PMI. With an FHA loan, even with 20% down, there is expensive PMI. She is really upset. She is angry that they are telling her this at the last minute. Can we work something out with you? She needs to make a decision tomorrow to change lenders. The closing date is in two weeks.
Wow, karma does not get more efficient than that, does it?
So she wants me to save the day, with two weeks left on the clock? To do something that normally takes 30 days. And I guess I’ll have to discount my services as well. And ask questions and get no answers? No thanks.
And she is angry they told her something at the last minute? Hmmm, you all know the story now, do you think she even allowed them to ask anything up front? Do you think she was forthcoming? Do you think she was easy to work with? Do you think extracting paperwork from her was like pulling teeth? Do you think she gave them the proper documentation at the last minute, which is why she got an answer at the last minute?
And do you think I chose to work with her in the end? Come on…do you really? No, I did not. I try and avoid nightmares from the start, but sometimes its hard to predict them when the transaction starts. But when the nightmare walks into your office and slaps you in the face, and says “hello, I am a nightmare, want to dance?”, it is pretty easy to say no.
What is the moral of the story? Answer all questions your mortgage lender asks, provide thorough documentation, be pleasant, say thank you, and when they ask for more, deliver that speedily and with a smile as well. There is no alternative I am afraid. All lenders need the same mountain of paperwork, get over it, provide it all, go to settlement, and enjoy your new home.
Learn More: Questions to Ask a Mortgage Lender