Did you know that if you are searching for a mortgage online you are one of the most valuable commodities on the internet today? Why?
Because you may be money in the bank if you APPLY ONLINE! Many who search online for anything from mortgages to socks go to a search engine, type in their request and are happily led down a path of ease and convenience right into the arms of an advertiser (usually on the first search page) claiming they have just what they need. In the mortgage business there are three types of advertisers: mortgage lead generators, mortgage lenders and mortgage brokers. They spend millions of dollars every year just to have a chance to sell you their products and services. Two of the above advertisers are not always the best option and could end up costing you serious money, time and a few headaches. We’ll explain below:
The Mortgage Lead Generator – This company’s primary function is to make money by enticing you to apply online. Then they sell your information (lead) to mortgage lenders and mortgage brokers. Keep in mind this is how they make money! They advertise convenience and the fact that you will be in control when several mortgage lenders or mortgage brokers compete for your business. If you are an experienced mortgage shopper you might come out of this experience unscathed but if you are a first time home buyer and have little experience with the mortgage process here are some questions to think about.
1. Do you know anything about the company or companies that will be calling you? Do they have good track record?
- These companies may be reputable but you are blindly trusting the mortgage lead generator who just sold your information at a premium to these random companies you know nothing about! The inexperieced mortgage shopper simply does not know the right questions to ask. Most think it’s all about the lowest rate and never focus on the company or the personal experience of the loan officer they are speaking with which is exactly what the lender is hoping for! It’s simply a roll of the dice!
2. Does the loan officer you’re speaking with have any experience?
- Did you know that the position with the highest turnover in the mortgage industry is none other than that of the loan officer! I have 20 years of experience to back this up. Trust me when I say that the Loan Officer position is a revolving door espeically at large lenders. An inexperienced loan officer can cost you serious money and time especially if you don’t know the difference! Roll the dice!
3. Does the ease and convenience of applying for a mortgage online outweigh all the negatives and still save you time and money in the long run?
- Many mortgage lead generators charge another fee on top of their initial lead fee in the event a lender closes a loan for you. This additional fee is many times charged directly back to you at close! This fee is generally in the $200.00 to $300.00 range! Now what you thought was an easy and convenient way to find a mortgage online actually costs you significant dollars! Easy and convenient are rarely ever free ! Roll the dice!
4. Will you enjoy persistent sales calls from several sales people daily for at least the next 30 days?
- If you apply with a mortgage lead generator you are authorizing this wonderful experience so thoroughly enjoy it. Most people find this quite annoying. If you aren’t up to the task of sifting through the endless barrage of phone calls and emails you may cave in and go with the smooth talker and not the best deal. Not to be redundant but Roll the Dice!
The Mortgage Lender – Of course this is the company with the money that you need. They have underwriters who look at your application and decide if you are approval worthy. They have processors who work with you to get all the documentation necessary to close your loan and they also have, you guessed it, loan officers, who will sell you their specific lenders products. Some say this is the best way to go when shopping for a mortgage loan because you are dealing directly with the money source. No middle man means savings. But the mortgage lender stilll may not be ideal choice for the reasons cited below.
1. The Loan Officer – Again you may get someone who knows what they’re doing and then you may not!
- Remember that large mortgage lenders have the highest turnover within the loan officer position. Mortgage Lenders unfortunately are most often glorified Loan Officer Training Centers. The Loan Officers that actually begin to understand their role most often move on to mortgage brokers where there is more opportunity to succeed. (see reasons cited below) And you still may be working with a middle man depending on the operational structure of the lender. At many lenders the loan officer has no direct access to the underwriting and processing departments effectively reducing the so called direct lender benefit. Many times you are forced to deal with someone you’ve never met to try and get your loan closed!
2. Limited options with products and rates!
- The lender is always limited to selling you their specific products and rates which many times puts you at a disadvantage in finding the best available rates and programs for your unique situation. This is a Huge factor! Mortgage Brokers on the other hand are not tied to one speicific lenders products and programs. More about this later.
3. Efficency always trumps service!
- Because profit margins continue to shrink for the mortgage lender especially those who sell their loans on the secondary market lenders are constantly looking for ways to automate their processes and become more efficient. Bad news for the consumer because this means doing more with less people. Ever heard the expression overworked and underpaid? This happens quite often at mortgage lenders. Again I’ve seen this in action. Frustration for borrowers runs high when there are delays and a general lack of personalized customer service.
The Mortgage Broker – OK I won’t throw any punches here because I work with a mortgage broker! The Mortgage Broker has the same problem finding and keeping experienced loan officers. Generally the larger broker shops with 10 or more loan officers have the biggest problem policing what their loan officers are doing. Normally the smaller brokers have more stability and experience on their side.
- Mortgage Brokers simply have more available options in products and programs for the mortgage loan shopper because they are not tied directly to any one mortgage lender but have relationships with many. This makes a mortgage broker a much more attractive option for a mortgage shopper online.
- In addition most mortgage brokers have relationships with Realtors, Builders, Appraisers, Title Companies, Surveryors, Home Inpsectors, Insurance Agents etc…. full service, one stop benefit for most mortgage shoppers who don’t have these relationships established.
- Mortgage Brokers can provide invaluable one on one personalized service that large lenders simply cannot. If you like you’re hand held, frequent updates, phones answered and calls returned quickly and the ability to quickly place your file with another lender if one lender fails then working with a professional experienced mortgage broker is the way to go. If you are a first time homebuyer it really makes good sense.
Also as you begin your search online for the right lender or broker follow this rule. Don’t apply with anyone you’ve never met.Meaning talk with a loan officer before you ever apply online. (Of course this rule of thumb precludes utilizing the mortgage lead generator.) This way you never feel obligated to anyone and can remain objective until you firmly decide who you want to trust with your mortgage loan needs. There are many excellent informational sites that fully explain the mortgage loan process and many that offer free tips for inexperienced mortgage shoppers. Take the time to use the web to educate yourself. You’ll be glad you did!
Article Written by Billy Killingsworth
About the Author: Billy Killingsworth is the editor for www.TexasMortgageInsider.com [http://www.texasmortgageinsider.com] sponsored by UniStar Mortgage, a full service mortgage broker in Texas specializing in all income and credit types.