Mortgage Triage

The medical folks use the world triage (pronounced tree-azh) to describe the process where medical workers separate accident victims into groups depending upon their needs. This allows them to allocate resources to those patients most likely to benefit from treatment. The dictionary has an additional definition, the process whereby things are sorted as to importance, and it is this definition that is relevant to getting the most suitable mortgage.

I cannot tell you the number of people who call me asking me to give them a quote on a 30-year fixed rate mortgage with zero points. Let’s establish a premise. The 30-year fixed rate mortgage with zero points has the highest interest rate of all the loans offered by the industry.   This isn’t just now. It was true last year and will be true next year.   It is always the most expensive loan.

These same consumers don’t go into store and ask, “Show me the most expensive suit.”   They don’t walk into a dealership and ask, “Can I see your most expensive car?” So why do they ask for the most expensive mortgage?   It’s because they have skipped the triage phase of the process, the most important part.   They jump right to the last step.

No doubt part of the reason for this is that our wonderful industry has taught them to do it, because lenders have learned that people may not understand the mortgage business, but they sure understand the word “Free.”   “How much are your loans?” they ask, and they love it when a loan person says, “Our loans are free.”   How about this one?   “How many points do you charge?”   “We don’t charge any points.”    You can see the appeal of these sales presentations.  

In defense of my industry, I have a good friend in a high management position with a big, national lender. We were discussing this one day and he said, “My job is to give the customer what he wants.   He may not be asking for the best thing, but it is to my advantage to give him what he has asked for.”   When you state it that way, it does sound reasonable, although the situation sure cries out for education, which is where articles like this come in.

I know that there are a lot of loan reps who go into sales meetings and they are taught to say these things to customers because their bosses know that these sayings work.   But you can imagine different categories of   borrowers, say, first-time homebuyers, people with growing families, and older people in their last homes. These people clearly have different needs, or different goals, yet each of them will get the same sales pitch.   If you think this is a sad state of affairs, here’s what’s worse. That loan, the most expensive loan we offer, is the most popular loan in America these days. That means that millions of people hear those sales pitches and say, “Where do I sign?”

This is good news for lenders because they have steered these people into the product that generates the greatest amount of interest income, so it is not likely that this is going to change anytime soon.

As one of my readers, I hope that you will be a smart shopper and avoid doing what the rest of the people on your block do.   I hope that you will find an experienced, trustworthy mortgage professional and you will start out doing a mortgage triage. Develop some specific goals and then sit down and find the mortgage that best helps you meet those goals. I’ll guarantee you that you will save thousands and thousands of dollars.

Be careful out there.