SCENARIO: Borrowers were recommended to me by their real estate agent. These borrowers were purchasing a new home. Rates were rising and they were extremely anxious about their new mortgage payment. They informed me the maximum payment they could afford was $3,500 per month.
PROBLEM: These borrowers were purchasing a home at the maximum of their budget. The anxiety of their new housing payment was causing them to have tunnel vision and to hyper-focus on mortgage rates.
DIAGNOSIS: These borrowers were shopping around in an attempt to obtain the lowest rate. I explained that shopping rates was an exercise of futility. Mortgage rates fluctuate daily. Any rate quote they obtained today would likely be different when it came time to lock. The rate I could deliver was about the same as the quotes they were receiving. However, I explained why it was unwise to lock right now. (There were several reasons, including the closing date and possible title issues.) Nevertheless, another loan officer was whispering in their ear and telling them what they wanted to hear. They decided to apply with him and lock, despite my warnings.
CONSEQUENCES: Many months later, the real estate agent filled me in on how this turned out. These borrowers eventually closed on their new home. However, their original rate lock expired well before they could close. The points and lock extension fees they paid to keep that rate was over ten thousand dollars! These were additional fees they had not budgeted for, did not expect, and were not told about until just before the closing!
BOTTOM LINE: Borrowers should NOT shop for a mortgage like they would shop for a box of cereal. The money you borrow may be a commodity; however, the advice and experience you receive certainly is not. Why would you entrust the largest investment of your life to anyone except a Certified Mortgage Planning Specialist® with a proven track record who consistently receives Five-Star Reviews?? Contact me WELL BEFORE you find a new home. Only then can we ensure this new home fits your budget, your lifestyle, that your transaction goes smoothly, and that your mortgage ultimately helps you build wealth over time.
______
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.
Leave a Reply