If you are like most shoppers who are deciding on a mortgage, it is easy for your eyes to gravitate to the lender offering the lowest rate, especially when reviewing dozens of them online or speaking to a few “sales people” on the phone. If you are buying a home and your mortgage shopping experience starts this way…be careful.
The Internet is Truthful, Right?
Just like in a lot of industries, a rate quote on the web is still just a seller looking for a buyer – it is simply an advertisement. Understand that most every lender trades their mortgages on the secondary level to the same basic group of investors who are expecting relatively the same yield for the long term performance of the mortgage, therefore, lenders start with very little base price variation.
Also, like in many other industries, there are several different types of business models. Who is paid along the route of providing the service or commodity, the level of service, and the value of the information provided to make the decision about the service or commodity are the basic typical variations. In general, it is the service, material quality, capacity, delivery and experience that create pricing variations in most business models.
Service Has Never Mattered More
In the mortgage world, there are companies who provide minimal customer information and there are companies who go to great lengths to see the consumer is informed and comfortable with their decision. Even if the customer believes they know exactly what they want. Call it “service beyond expectations”. Variations in mortgage company business models can create variations in price offerings. The trick is selecting which is best for you. An old phrase comes to mind…”you pay for what you get” is very true when you compare certain models.
Is the opportunity to work with someone who keeps you informed on the process, meets deadlines, explains options, sets clear expectations for documentation requirements, makes recommendations based on your financial profile, regularly follows up, and even after settlement, searches for future opportunities for you to save money based on market conditions, worth a few extra dollars per month or at settlement? The financial crisis of 2007 revealed millions of customers who bought a “rate” and were set up to fail by companies who displayed greed with their business models. Don’t believe for a second they are all gone. Reputable companies and more importantly, reputable Loan Officers deliver value beyond a price. Their success is only a reflection of your success as a borrower.