| Libenter
homines id quod volunt credunt
I
am not a Latin scholar, but I love quotes and I
found this jewel from Julius Caesar: Men
gladly believe that which they wish for.
I thought it would be interesting to know the actual
Latin phrase, which I found on the Internet. In
addition, Caesar was arguably the first person in
history to wield power over a large number of people,
so I think it is important to see if what he said
has any relevance to our world today. So what has
that to do with mortgages?
It
has to do with the behavior of people. Shoppers
WANT to find the best deal they can, and sometimes
they want it so badly that they are willing to suspend
the sense of caution that ought to be operational
when they shop for anything. We all seem to be
suckers for sales gimmicks, like the worlds, “FREE,”
and “Sale! Everything must go!,” “Save up to 40%,
and More,” and “I can get it for you wholesale,”
and “Well meet anyone’s price!” Over the years
I have seen hundreds of examples of this. So have
you
When
it comes to buying things, we have all made mistakes,
saving $1 and finding out that we wasted our money
buying the cheaper thing. Pretty soon you figure
out that you’re better off buying a higher quality
than the advertised special. In fact, after a
while, you really figure out that many stores and
manufacturers make a cheap line of stuff in order
to appeal to the price-conscious shopper. I have
been to some of the Outlet Mall shops and their
merchandise is cheaper, but it’s not he same stuff
they carry in their regular stores. Its cheaper
because the quality is worse. And yet people want
so badly to get a bargain, they go there by the
busload. I think that many outlet stores make
more money on the cheap stuff than the regular stuff
because people are so enamored with finding a bargain
that they don’t properly evaluate value, the ratio
of cost to quality.
I
started doing a loan for a guy who then got a call
from his current mortgage holder. They offered
him a no-cost refinance at a rate of 6%. He’s got
a 6.875% loan now so this sounded like a no-lose
proposition. He forgot two things. First, he assumed
that this company was his lender. Not true. His
loan is actually owned by FannieMae and the company
he sends the check to just does the accounting.
He
was led to believe that this company had an advantage
over all other lenders because they already had
his loan. He wanted to believe that they were doing
something special for him that they weren’t doing
for other people. Not true. They will just originate
a loan like me or anyone else and it will be sold
to FannieMae. It wasn’t a special deal either.
His company services over 2,000,000 loans and they
probably have a small army of people in cubicles
making phone calls making the same offer to thousands
of people.
Most
deals like this succeed because they play into the
minds of what people WANT to believe. I have seen
many people who were, in my view, obviously being
lied to about rates. They call me and I just say,
“Get him to show you the rate sheet.” They call
me back and say, “He wouldn’t show me the rate,
but he assured me that he can get me that deal.”
Nonsense. The reason he wouldn’t show you the rate
sheet is because it would show him to be a liar.
Of course, when they go to sign loan documents they
find that out too. People so badly want to have
the deal they are promised, they don’t do what reasonable
people should do to protect themselves.
So
when shopping, you ought remember another Latin
phrase: caveat emptor, which means buyer beware
.
Be
careful out there.
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