LOCK THAT QUOTE IN

Mortgage rates aren't any good if you can't lock them in. No matter what you're being quoted, if the lender or mortgage broker can't lock those things -- beware.

I say this because I lost a deal to a mortgage broker the other day. Hey, can't win 'em all, right? Nope, ya can't. But you certainly have to try. No loan officer gets every deal; it's impossible.

In fact, I dare say I've lost as many or more loans that I've won. It's just sometimes when I get beat, and any loan officer out there can back me up on this one, by someone quoting interest rates that are simply not available it burns me up. It just isn't fair.

I know full well my prospective client will get the shaft later on down the road by this person, but there's little I can do. I'm not talking about an 1/8 or even 1/4 percent difference in rate; I got beat by a full percentage point. On the same exact loan!

That doesn't happen. Can't happen. Lenders can't be that far apart in rates. Yet I lost my client to someone who simply "low balled" and got the deal. What will happen is that the loan officer quoting ultra-low rates is simply hoping that rates go down so he can honor his rate quote or tell my prospect that rates went up after he got the application.

Sour grapes, anyone? Maybe. Okay, yeah, sour grapes.

This prospect was a referral from one of my top Realtors, and I quoted my best stuff. But I got a call a couple of days later telling me that my prospect chose someone else who was quoting much lower rates, thank you very much.

"Did you get a Good Faith Estimate?" I asked.

"Yes, I have it right here," he responded, "I'm afraid I'm going to have to go with this other person."

"Okay, thanks for the opportunity, hope I can help you in the future. Can you lock those rates in today with this mortgage broker?"

"No, he said he couldn't lock me in until he had my application in and I paid my application fee, but I can't pass up this offer," said my potential client.

"Hmmm," I said, "Usually someone can lock you in without an application or especially paying any fees, but I guess this loan officer since he has such low rates might have special requirements." I tried to be as diplomatic as possible and certainly with all due courtesy.

What was I supposed to say was, "Hey, you. You're working with a liar. If he can't guarantee those rates -- they aren't there."

But I didn't.

I lost the deal and resigned to keeping my fingers crossed that I'll get another phone call in a few weeks when he's getting ready to close, wanting to know what my rates are. Maybe. Or maybe not because he'll be too far into the process that he can't change lenders.

If your loan officer can't lock in ultra-low interest rates without such stipulations as "pay me some money then we'll talk," then you'd better watch out.

Okay, I know that there are fees that are sometimes paid to lenders upfront for a long term lock or perhaps a lender takes a commitment fee at the beginning of a construction project, but overall a consumer should be able to get what they're quoted. I also know that some lenders don't lock without an application and that's perfectly understandable to make sure the prospect is serious about the transaction.

But if either paying upfront money or providing a completed loan application while accompanied by rates that are literally out of this world -- just watch out. Get your lock confirmation as soon as you can.

I've got a funny joke I like to tell that illustrates the ol' "bait and switch."

A customer walked into a meat market and said to the butcher, "How much is a pound of hamburger today?"

The butcher replied, "My hamburger is $5.00 a pound."

"$5.00 a pound! Why, the market just across the street sells it for $3.00 a pound!" yelled the customer.

"Then go buy it across the street."

The customer said, "Well, I can't because he's out of hamburger."

"That's nothing" said the butcher, "when I'm out, my hamburger is only $1.00 per pound."

Published: September 8, 2006

By David Reed
Realty Times