Get the Application!
November 25th, 2009I got a call from a couple who was interested in refinancing their home. It was a slam-dunk deal that would be approved anywhere. So we chatted about rates and I told them what the rate and fees were for the best deal I knew about.
They said that they had talked with their current lender who had offered a better deal. That was a bit of a surprise because I had always been able to beat that company's deals. So I said, "Let’s look at their website and see." Sure enough, at the same rate the fee at that lender was about $3,000 higher than what I had told them.
At that point they admitted that the representative had told them the same thing as on the Internet, so I asked how they got a better rate. They said, "We told them that we had gotten a Good Faith Estimate from another lender that was lower than the rate that we had just been quoted." The representative had said that they would meet that deal. My guess is that the representative was not given the authority to "fiddle" with pricing, but was just telling them that — whether it was truthful or not — to remove a barrier.
This is not uncommon because the way lenders are organized today it is difficult for consumers to talk with a knowledgeable person or to know if they are getting the straight answer.
In fact, the first-line customer service people have one job: to GET THE APPLICATION!
Their job is not to solve problems or try to qualify people over the phone. A manager of such a call center once told me that he told his people, "It’s not your job to qualify people or to solve their problems. If there is a problem, we will discover it in the Underwriting Department. Your job is to get the application. Tell them whatever you have to, but get the application."
With that knowledge, you can understand that the poor customer who is in search of reliable information is in tough shape. He wants good information, but what is going to happen when he talks to people who will tell him anything to get him to take the next step?
This is especially dangerous with pricing because of peoples' innate desire to believe they have found a good deal. Let's assume you call three lenders and you hear 5 percent from one lender, 5.125 percent from another, and 4.875 percent from a third. Okay, you think you found a good deal.
Then I give you additional information. I tell you that one of those three lenders lied about rates. Which one do you think is lying? I will guarantee you wishful thinking enters the picture and that most people will still assume that the 4.875 percent is the truth. Is that possible? Sure. Is it likely? Nope; sorry. ? ?
This further emphasizes the importance of dealing with honest people when getting a loan. There are some in your home town and you will do better dealing with one of them than calling 800 numbers listed or searching on the Internet.
Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower
articles, Randy is a mortgage broker who has financed over $1 billion
in properties. He writes about home buying and real estate finance
topics for CreditBloggers.com.
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