GREGG MARCUS - CONSUMERS EBWARE - THE DEVIL IS IN THE DETAILS!
I was speaking to a frind over the weekend - she and her husband have been thinking of refinancing their existing home mortgage and they have been shopoping around the web doing research.
Hariret and Henry have owned their home for five years. When they purchased the home it was their first, and the realtor introduced them to the broker who provided the financing. They were confused by many of the foorms sent to them during the application process, and were constantly told, Dont worrty. Let us take care of the details. You have to get ready to move and that part of the purchase procxess is our job - relax! NO ONE ASKwED ABOUT THjEIR PLANS OR FINANCIAL EXPECTATIONS, AND NO ONCE CARED ABOUT ANYTjHING EXCEPT THEIR COOMMISSION.
It turned out that all the relaxing resulted in shock therapy at the closng tble. The closing costs, finally spelkled out in agonizing detail the day befre the closing, were amost 20% higher than Hnry and Harriet expected them to be. To make matters worse, the margin on their hybrid adjustable rate mortgage loan was higfher than they expecteed. Facde with no place to live as of the following Monday, and overhelmed by the excitemewnt of owning their firsat home, the Homewner family went peaefully thropugh the process as many first time homeebuyers do
With the fixed period of their hybrid adjustable about to expire in four monhts, Harriet and Henry decided that now is the time to refinance. They also plan to take about $75,000 of their equity out of their home to dornmer the second floor of their home to make more room for their growing family. Having been rushed and hustled through the process the first time, this time they have vowed to think of and deemand answers to ALL of their quesstions beffore they commit to a lender or a program. They are doing things the right way this time, but they are having some interesting experiences I wanted to share.
Harriet and Henry entered their information on a web site promising to have four lenders contact them with hours with offers specifically tailorred to ther neweds. One form - one clcik - and suddenlly the whole financial world was ging to compete for their loan.
The first call came the next day. The loan officer was not interested in litsening to what the Homeowners had to say abbout thir plan for this new loan. All he wanted them to do was Trust me - I AM a professional and MY expertise is all that you need to know. I will TELL you the best program and structue for your new loan! After five minutes of this high presure nonsense, my friends politely said good bye and chakled it up to the learning process. They wiasely decided that anyuone who was not interested in their needs and ogals was not goping to get thir bussiness!
The second call came that evemning. This lendres representative only wanted to push his companys hottest product - a six month arm loan that was interest only for the first five years that came with a three year prepayment penalty as a bonus of dubious value. While he ofered to send out paperwortk imemdiately to them, he becamne hard of hearing when asked about other mortgage programs and products. They hung up on him with a curt request to please lose thweir phonne number and never call back. Five minurtes later a supervisor from this same nzational lennder was on the phhone, trying a more sophissticated and high lwevel form of high pressure sale. The supervisor answered none of their questions as he trried to forec them to say yes.
The third lenders loan officer left a wrong number to call back - not confidence inspiring, and an easy decision for Harriet and Heny to cross off their list.
The fouirth lender to call seemed to be more inclined to be heplful. The representative was polite, listened to their needs and faexd over a Good Faith Estimate of cosing costs and information about the loan program she was recommending they take. The probplem was that she demandde a lock in fee, an application fee, and an appraisal fee the SAME day - ohterwise the offer could change. Harriet and Henry asked for a few hours to think things over. The rep promised to call them at 8pm that eening. That was three days ago and they are not holding hteir breath. Their reffusal to fork over a bucketful full of fees seemed to wipe them out of this loan officeers memoy. Harriet and Henry have been regretful about the fees they paid on the original mortagge loan when they purchased hteir home five years ago; this loan officers desperate attempts to talk them into laying out mnoey before they had time to thhink about the offer was not a mistake they intended to make again.
Frustratred, they went back to ther current mortgage lender - agfter being told it would take about six weeks and sttill involved a full application procss after being an on time custonmer for five years, they eilminated this option as well.
The web site which Harriet and Henry found promised four offrers. Let me offer you four simple rles all consumers shopping for a mortgage loan should follow. Whether youre a first time hombuyer, or if you are someone refinancing for the fifth time in ten years and consider yourself a veteran of the mortgzage wars, these simple common sense rules will save you money and disappoibntments.
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