Bill Ladewig's Blog: This Will Make You a Rate Shopping Genius.

Bill,

This is good info. So often shoppers get rates over a period of time. As we know, this is not a good way to do it as rates are constantly changing. Being able to lock the loan is also very important. This will flush out any potential "low ball' offers. This assumes you have a house under contract.

Bill - Thanks for the information. There were a few tips in here that I was not aware of and would be very beneficial to my clients. Clients shop for rates all the time and rarely take into consideration that rates fluctuate quite frequently and fees vary from lender to lender. Good advice.

Thanks again for sharing your post with us tonight. Have a great weekend.

Bill- Great Post. 

As a licensed Texas Loan Officer, I see folks shopping rates all the time. 

The only thing I did not see in your post was service.  Wells and BofA may be .125 less than me on a given day, but your loan will not close for 60-90 days!!  So folks need to be reminded that working with a big box bank does not equate to good service and timely closings.  Missing a closing date can cost the buyer considerable hardship and money as well.

Home buyers need to remember they are not shopping for the best price on a gallon of milk, this is their mortgage.  They need the best expert advise from seasoned professionals.  They also need someone who will take their call after normal "banking hours".

Amen Melissa, big box banks must want Texas loans more the California loans because here their service and their rates are easy to beat.  Check out my weekly rate survey at: http://www.themtgmentor.com/Rate_Survey.html

Thanks for your comment and have a great weekend.

Some very excellent points Bill.  The only thing I would add is that when it comes to locking, I counsel my borrowers not to lock until we know we have a deal - especially before the appraisal is done.  This is done for self preservation, quite frankly.  Even though you can lock, I must take into account the lock pull through metric that lenders now impose on mortgage companies, and that mortgage companies impose on their loan officers.

If we burn too many locks - then a lender relationship may be terminated - or the pricing becomes worse.  That is a very bad thing...

Unfortunately there are and have been some mortgage brokers who lock too soon, and it can hurt the rest of us - not to mention the possibility of the loan officer being terminated.  My company does not look kindly on loan officers whose lock pull through goes below a minimum level.

So while you make an excellent point - and it is a good question for the consumer to ask - let's just say that I personally do not allow my client to lock too soon.  If that puts me at a disadvantage - oh well....life in the big city as they say...  The good news is that by having patience, we get better pricing.  It's a tough call...

I don't think the "pull through rate" of any mortgage broker should be the borrowers concern. 

Locking in a rate is about the client, not how many inexperienced LO's at a given company that abuse this privilege.  The broker should deal with them accordingly, right? 

The borrower does not care about the broker's business relationships, they just want to know if an offer is made on a particular property, their rate and estimated payment is protected.

The "pull through" rate refers only to mortgage brokers and the incentives they are paid by lenders, correct?

I think every client should be given the benefit of being able to lock in their rate asap.  In this economy rates can change 1% in a matter of hours, that just happened to us a few months ago, remember?

 

 

Bill,

Pricing is different for Texas loans and the majority of my state is NOT a declining market, therefore they will advertise and try to pull in these loans more than states like CA, Fl, AZ etc..we know the list.

I will check out your rate post info, but pricing is predicated state by state.  Texas also has laws that prohibits certain lending activities and makes it more difficult for banks to process loans here.  We have interest rate limits and ltv limits on cash out loans that would seem foreign to other states.

Melissa - I agree that in a perfect world the consequences of poor lock pull through should not be the concern of the borrower in the short term - but to take it to the extreme, if we mortgage brokers, and mortgage broker companies didn't care - we would be out of business - and then we can't help anyone.

If the lenders didn't have adequate pull through - they would run the risk of remaining in business - so it should be everyone's concern.

I'm talking about acting responsibly.  If we lock too soon - not knowing if a property will appraise, and the deal therefore doesn't close, the lender suffers a financial loss.  It is in no one's best interest to lock irresponsibly.  Everyone suffers, even if it is indirect.

It wasn't always this way - but the banks are tired of losing money - so they are enforcing this tougher stance.  This is what you will hear by talking to any lender or any mortgage company - we all must work together.

While I would love to accomodate a client's request to lock right away - I just won't do it - I will politely refer them to someone else.

Hi Rick, I don't necessarily advocate initially locking a loan.  In fact it cannot be locked until there is an accepted offer. 

The lock discussion here is simply to provide the consumer ammunition to deal with lenders.  The consumer must have an idea how the system works in order to protect themselves. 

The more the consumer knows about the loan process the better it is for honest lenders and more difficult for the not so honest.

Melissa, I need to re-read and possibly rewrite my blog because both you and Rick took it to mean I advocate immediately locking loans.  I don't, the market will generally tell us what to do on that score. 

In your response to Rick you are absolutely correct that "Pull Through" is not the borrower's concern. but WE must be concerned because there are lenders that will blow us off the minute our pull through drops below 70%.

You are correct, Texas pricing is normally about 0.25 Point, points not rate, better than California loans from most lenders who operate in both states.

Thank you both for your comments and discussion.

Hi there Bill.

I didn't actually think you were advocating that position - I knew you were making the point that theoretically it was possible.  I was just stating my own opinion that personally, I can't afford to let it happen for the exact reasons you state. (And my company is ready to come down on me big time if my % goes too low.  Fortunately I'm in the high 90s.)

I have found that when I explain this business reality - without exception, the borrowers understand, so it has not been a problem and I have not lost any business over it.

I love this topic - I have blogged about it extensively in the past - in my "pre-AR" days.

Thanks for your gracious reply - you are a gentleman indeed.

Bill - Very interesting read and thanks for the Late Night!

        

Thanks Rick, the discussion was interesting and especially informative to borrowers who are trying to understand our "system".  They were allowed a peak inside.

And, from the discussion it is obvious to me the both you and Melissa are quality professionals.

Robert, Wow it is late, a couple more things to do and it is lights out.

Bill, I love your guru logo

Great info, Bill! My Broker has insisted this type of advise and communication with Buyers that are shopping Lenders.

The trouble we see commonly (when Buyers use their own Lenders pre-selected before our chit-chat) is a non-performing LO. Good to see that you're advocating the steps that a Buyer can take to ensure the best process.

Good post...very informative, and good tips.    Appreciated!

Perfect timing for this blog. A client just asked me today how to go about shopping her loan. This is what I told her in a nut shell but you worded it much better. I will email her this blog.

Thank you

Janice, me too.  :)

Thanks Ashley we can keep everyone hones when we ask the right questions.

Thanks Melendez, I appreciate your comment.

Vito, timing is everything.  Glad it was helpful.

Bill, awesome post - chalk full of valuable information.  Just like our clients shop for the right house, so too should they shop for the best rate.  Not doing so could cost them great in the long term.

Very interesting and I saw some points that I was unaware of.

Tim and Pam, with good information consumers become armed and dangerous

Robert, glad I was able to shine the light on a couple of points.

Bill, this is so good. I'm glad you made it available as a re-post, because, I am going to.

Hello again Bill.

You are busy posting blogs on AR tonight.

Good information and I'll be passing it along to some buyers I'm working with.

Thanks again,

patricia Aulson/portsmouth nh homes

 

Bill, good info for those of us on the Real Estate side of the deal.  Thank you for the information!

Patricia, rust and I never sleep :)

Bob, thanks for your comment.

Thanks for the good information.  It's hard to keep all the pieces of the mortgage puzzle together.

 

Love this info. Potential clients should appreciate your straight-forward advice. I find most have a pre-conceived notion that we lenders are trying to dupe them with rate/fee information. This info encourages them to shop smart and in doing so they can distinguish between the true professionals and the "order takers."

It is well known that cash can make us free. But how to act when somebody does not have money? The one way is to try to get the loan or college loan.