Still Think It’s Better to Apply Directly To A Bank? Borrowers Share Shocking (But Predictable) Experiences.

(Originally published August 7, 2010.)

My practice is based exclusively on referrals. Realtors, attorneys, CPAs, financial advisors, and of course, prior clients, refer to me with complete confidence that their friends, family, and clients will be treated with respect, receive the right advice, will secure a competitive rate, and most importantly, they will close.

Yet some borrowers don’t initially appreciate the value of working with a Mortgage Planner like myself. They rhetorically ask, “Why would I have a problem going to my bank for a mortgage?”  The answer is frequently wasted time, poor advice, lost investment opportunities, and tens of thousands of dollars in additional costs over the life of their loans.

Some Recent Examples:

• Scenario: Borrower is purchasing a $1.6M condo in NYC and applying for a $400K mortgage. His income and credit are excellent, and he has significant investments at “his bank.”  Why wouldn’t they approve him?
  Problem: Although he plans to eventually use this condo as his primary residence, he already owns a coop and isn’t planning on selling it for many months. I told him that “his bank” will view this as an investment property and based on their guidelines, deny the loan. I had a solution that worked for him. Never the less, he applied with “his bank” anyway.
  Result: His loan was denied and the self-serving “mortgage salesperson” at his bank convinced him to “cash out” the needed funds by refinancing his coop instead.
  Consequences: When he sold his coop and paid off the mortgage, he eliminated his mortgage deduction. Because this borrower received the wrong advice, any mortgage on his new condo would never be tax deductable. By not heeding my advice, he’s now paying tens of thousands of dollars in extra income taxes that could easily have been avoided.

• Scenario: First time buyers are purchasing a $444K home and putting 20% down. They had good income, credit, and assets. His wife worked for a “community bank” and felt they would receive VIP treatment and an easy loan approval.
  Problem: I informed them this “community bank” followed strict Fannie Mae guidelines. Due to a subtle issue I picked up on regarding the property, this bank’s strict interpretation of the guidelines would result in a loan denial. These buyers applied with their community bank anyway.
  Result: Five weeks later, they were back. My predictions proved accurate. But with my help and guidance, they closed with big smiles on their faces.
  Consequenses: Buyers, sellers, and realtors unnecessarily stressed out because of a loan denial that never should have been.

• Scenario: Borrower is buying a home for $990K and wants a$500K mortgage. He has great credit and millions of dollars invested with a large, well known bank. He enjoys a private banking relationship with this bank and believes they will bend over backwards for him.
  Problem: Upon reviewing his documents, I noticed that, although his total compensation was about the same as prior years, his company had recently changed the way he was paid. I explained to him that, private banking relationship or not, “his bank” would not count all of his income and would deny his loan. However, I had another solution. He didn’t believe me and applied to his bank.
  Result: His “private banker” assured him, “No problem!”  Weeks went by. No updates. The borrower called his bank numerous times and was told, “Everything’s fine! I’ll call you next week.”  His calls were never returned. Weeks turned into months. He learned of his loan denial not from a call from his private banker, but from a form letter in the mail.
  Consequenses: He lost the house, lost face with his realtor, lost confidence in his private banker, and wasted a few thousand dollars on attorney, property inspection, and appraisal fees. However, when he found another property, he took my advice and worked with me. Sixty days later, he was the happy owner of a new home.

Despite the new banking regulations and mortgage shakedowns, the big banks still employ slick-talking and barely-competent mortgage salespeople, still saying anything to get the business…and still failing to deliver.

Who will review your financial situation, uncover potential issues, and address them before they become large problems at a bank?  Why would you entrust the largest investment of your life to anyone but the most competent and qualified Mortgage Planner?  And guess what?  The rates and fees you’ll receive are probably about the same as if you went to “your bank.”  The big difference?  Your loan will actually CLOSE.

In this crazy lending environment, it’s critical that you work with the right people who know what they’re doing and can get the job done. Working together, we can ensure that your transaction goes smoothly and stress-free.

Since 1992, Warren Goldberg has helped thousands of clients own their homes, refinance their mortgages, restructure their debts, and invest in real estate. Warren is known for his wide knowledge of mortgage products and wealth-creation strategies.