How
Much Is Your Thing?
The way I look at the mortgage market, 50 percent
of mortgage shoppers get a deal that's worse than
average. Of course, the other 50 percent get a deal
that is better than average. The top 10 percent
get a deal that is better than the other 90 percent.
Unfortunately, over 50 percent of the people engage
in wishful thinking and assume that they made it
in that top 10 percent. The question is, “How
do you really get to be in that top 10 percent,
instead of thinking that you are?”
My
strongly held opinion having participated in about
3,000 mortgage transaction and seen or heard about
a couple of thousand more is that the successful
shoppers realize that they are shopping for a service,
not a thing. The unsuccessful shoppers, by comparison,
think that they are buying a thing and shop for
a mortgage as if it were a barbeque. They call around
to a bunch of lenders and ask, “How much is
your thing?”
Here’s
another reality: most people don’t know much
about lenders or the mortgage process and many of
the assumptions they have about the process are
derived from their experience in shopping for things.
Only infrequently do we shop for services from a
professional. If you needed the services of a lawyer,
I hope you wouldn’t call ten of them and ask,
“How much do you charge per hour?” and
then go with the low bidder. Would
you call a real estate agent and ask, “How much
are your houses?”
No
one would seriously think about shopping for a doctor
or dentist by calling and asking how much they charged
for their procedures. In fact, much of what is wrong
with the current health care delivery system is
a result of the insurance industry driving the economics
of the medical system without regard for the quality
of the actual service provided. One of my doctors,
a cardiologist, stopped accepting the “rules”
as laid down by my health insurance carrier and
won't accept their payment schedule. Frankly, I
think that he is worth what I pay him, and I don’t
care that my insurance company thinks that it’s
too much. After all, it’s my heart, not theirs.
The
mortgage shopper who tries to buy a thing makes
the assumption that all the providers are equal
and that the goal is to find the low bidder. That
is just not the way to go about it. What all shoppers
need is some help making decisions, and the thingy
shopper starts out with the decisions made on his
own and he's usually wrong. Then, in effect,
he puts it out for bid. Here’s why this is
wrong.
Every
mortgage shopper needs to make three major decisions.
First, there are hundreds of loan programs, but
you want to establish your goals before you start
figuring out which type of loan best helps you meet
the goal.
Second,
within each program, every lender offers about a
dozen rate versus fee options, one of which is best
for your situation, and different from that which
is best for your neighbor.
Third,
pricing for programs varies daily and some days
are better for locking than others. These critically
important steps are best accomplished with the help
of a counselor and only after these decisions are
made is it appropriate to select a lender.
I hope that you can
see that you are going to be better off seeking
an experienced, trustworthy person to guide you
through the process and help you make those decisions.
Do that and I can guarantee you that you’ll
end up with a better deal than those who call around
asking, “How much is your thing?”
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