Success Story from the Trenches

I hear a lot of tales of woe from readers so it is always a great pleasure to hear about someone's success. I got such a story from Eric who told me of his successful foray to the mortgage forest!

He was buying a new home, one that was under construction. The builder tried to manipulate him into using their "in house" lender by offering incentives. In this case it was a significant discount on upgrades purchased through the builder's design center. Now, if someone were planning to get a lot of upgrades and if the discount were big enough, you could be talking about $5,000.

Eric figured out, correctly, that these incentives weren't being offered because they wanted to be charitable. The builder and lender were making much more than $5,000 and were prepared to give $5,000 back if they could entice him into taking their deal. As you might suspect, if the builder and lender were actually separate companies, as appeared to be the case here, there were likely an illegal kickback from the lender to the builder that allowed the builder to offer the discount.

Remember that the loan rep knows that he is not competitive because he has to raise his fees enough to cover the kickback so he will do everything he can to avoid giving someone a quote. But Eric was skillful enough to get through the stonewalling, he determined that the rep did not have his interests at heart, in fact was trying to diddle him.

At this point I will acknowledge that Eric had bought and thoroughly studied my book so was a very shrewd shopper. He was able to do a lot of off-line consideration of his goals and selected a loan program that helped him meet those goals. So prepared, he went on line to see if he could find a good deal.

He fairly quickly found that the people operating at the call centers are not very knowledgeable, but he didn't need that. He had already done his preparation. Not only that, he knew how to deal with a system where the people he was dealing with knew less than he did.

Of course, most borrowers do not read books, they don't study the Internet resources, and seem especially vulnerable to the ploys of clever advertisers and lying loan agents. Of course, they don't get very good results.

In Eric's case, he dealt with a well-known bank that has a good Internet presence. He knew from using my worksheets that he was well-qualified, had good credit scores and would be entitled to the best rate that they had to offer. And he kept up the pressure until he got the deal he wanted.

Even then, the docs came out with points being 1/8th higher than promised but again he kept the pressure on until they agreed to modify it. In the end, Eric got a good deal, probably putting himself in the 90th percentile of those who got loans in that period.

My perception and belief and why I write books and articles like this is that anyone who is willing get as well-prepared as Eric and is willing to work as hard as he did can get, or perhaps I should say earn, similar results. If I didn't believe that, you wouldn't be reading this.

Now I'm going to put in a word for mortgage brokers because I also believe that had he worked with an honest, trustworthy broker, he could have gotten the same result with less work. Frankly, the good brokers have done it a thousand times before, have lots of contacts, so what was hard work for Eric would have been just another walk in the woods for me and others like me. Because some incentive pricing is not offered through retail channels but is offered to brokers, he might have been able to do even better.

So if you are looking for a mortgage for a purchase or you think that it is time to trade in your ARM for a fixed rate loan, take courage. Buy a book, hopefully mine, and take time getting educated and then when you sally forth, sword in hand, you can be as successful as Eric.

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