Recently, a couple came to me seeking a second opinion on a mortgage process that suddenly wasn’t going as they’d expected.
The loan their broker had offered them on the $715,000 property (with 10% down) came in at a very reasonable 4.25% and initially, they believed they were headed toward a typical closing.
However, 20 days into the transaction the lender required an additional $50,000 in cash to secure the loan. Understandably, the couple was shocked and explained that this unexpected request would be difficult to meet. They were then advised to make an early withdrawal on a 401k, which would cost them $10,000 in penalties. Sensing the pushback, their broker also offered an alternative: a different loan with a considerably higher interest rate at 4.65%, but with no cash deposit required.
Neither of the options they’d been offered nor the actions they’d been advised to take was in their best interest, but with just 12 days left to close on a house they loved, the buyers felt cornered.
When I got their file, I knew without a doubt I could find them a better mortgage at a lower rate, and without the additional cash down requirement.
I ordered a rush appraisal and got them a much better loan at just 4% and we were able to close the transaction just in time. The decision to seek a second opinion ended up saving them $330 a month on mortgage payments and adding up to a whopping $120,000 over the life of the loan.
A 2017 J.D. Power study found that 17 percent of borrowers said they regretted choosing the lender they completed their transaction with. The Consumer Financial Protection Bureau has also found that more than 30 percent of mortgage customers surveyed did not comparison shop their mortgage, and more than 75 percent reported that they applied for their mortgage through a single lender.
Some buyers stay with a mortgage broker who isn’t a good fit simply because they don’t realize they have the right to shop around and even to switch brokers. There’s also sometimes simply a perceived sense of obligation keeping consumers tied to a broker who offers less than stellar service.
While the lender is under certain obligations to the consumer once a Loan Estimate has been issued, the consumer isn’t under any obligation to accept the loan or even to use that lender. The Loan Estimate is not a contract and borrowers are free to comparison shop or switch mortgage lenders.
Unexpected changes in fees and loan conditions are the most common reason people switch lenders. Other reasons borrowers will switch mortgage brokers include lack of communication, bad customer service, and misplaced documents or improperly completed paperwork.
These issues can and will cost a home buyer money. As a mortgage broker, it’s my job to not only get the paperwork and communication right but to act as an advisor with my client’s best interests in mind. If I can save a client money, time, and stress that’s a win for everyone involved.
Want a second opinion on a transaction you’re working on? Get in touch.
An interesting postscript to this story is the following comment provided by the couple they’ve given me permission to share:
” Honestly, my wife and I felt comfortable with the decision that we had made with the original mortgage broker we chose. We knew that the interest rates hovered around 4% and we felt that at 4.25% we were getting a fair deal overall. It wasn’t until we tried to move torward the closing date that we realized we had made a bad decision.
The home buying process is stressful enough, the fact that our original agreement was somehow no longer valid and rates would increase if we didn’t provide more money was an absolute shock to us..
Our two options were to pay more money now or take a higher interest rate and pay even more over the term of the loan!
People say “it all works out in the end” and we were lucky, it did work out for us and we still closed on time! We ended up getting a much better deal with Mat, we saved across the board (closing costs, mortgage costs and interest rate).
All of this goes to show; don’t be complacent, work with a trusted lender and question what you are being told!
My wife and I are extremely grateful and all we can say is, Reach out to Mat Mattila if you have ANY mortgage related questions, he will not steer you wrong and will most likely save you time and money!