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RETURN TO GO
Copyright © 1999-2000 Leopold A. Rodriguez, USA
All rights Reserved. Printed With Permission - 05/99 Forrester Research Inc, of Cambridge, Mass., estimates that on-line mortgages will capture nearly ten percent of the $1.3 trillion mortgage market by the year 2003. So, why use a live mortgage broker when, armed with an ISP, an HP-12C, Excel, and NoDoz, you can run your own calcs in only 48 virtual hours. Interesting aside. I heard, second hand, the tale of a real estate broker in Silicon Valley who advised his agents to not accept any offer from a buyer who was working with an online lender. Reason? There's no one readily available to provide periodic loan status. Such uncertainty is not acceptable in a very hot, very fast market. Since I have never worked with a client who used an online lender I cannot attest to the validity of his concern. I am an exclusive buyer broker - not a mortgage broker. I don't make a dollar in mortgage brokering and I receive no referral fees. But mortgage financing is so critical and so misunderstood that I spend a lot of time educating my clients, and devote half of my seminars to this subject. In my essay, What's Your Best Rate, Tomorrow, I recommend that borrowers use mortgage brokers, and that they agree now as to how much the broker will charge over wholesale, on that date in the future when the borrower is ready to lock. This essay considers that recommendation in light of online mortgage financing, where there is no one to whom the borrower can address such a question. On May 22, 1999, I conducted the following unscientific survey while sipping a latte. I searched for a California 30 year fixed $400,000 jumbo, no prepayment penalty, 30 day lock, at 7.5%. I found the following quotes at the following sites:
For comparison I drew wholesale rate sheets for the following three local lenders:
OK, so, who's got the best deal - today? Who's got the best deal - tomorrow? If want to purchase 100 shares of G.E. you should be able to save by doing it through an online stock broker. There's not a lot of difference between one share and another. The same logic holds for a mortgage ONLY IF you know the exact loan product that suits your needs, and ONLY IF many sources offered the identical product. The challenge is to define that product and its associated costs. And, apparently, it's got to fit "standard" underwriting criteria. SO ..... You now want to analyze the cost savings of a 15 year loan to one amortized over 30 years? Well, you'll have to start all over and run them head-to-head on each site. Return to GO. You now want to compare a 7 year fixed to a 30 year fixed? Return to GO. You're willing to accept a 3 year prepayment penalty? Return to GO. You're ready to lock in 15 days? Return to GO. You prefer the logic of an APR comparison? Return to GO. You now want to compare Adjustables to fixed? Return to GO. HOWEVER ..... You now want to compare 80-10-10 financing to 90% financing? Hmmmmm You want a lender who'll credit you for your very impressive FICO score? Hmmm You need a lender who will accept your very high back end ratio? Hmmmmm You prefer a lender who'll waive PMI on 90% financing? Hmmmmm You need a lender who'll consider mixed use? Hmmmmmm You need a lender who'll do high rise condos? Hmmmmmm You need a lender who'll allow 100% cash down by Gift? Hmmmmm You need a super jumbo? Hmmmmmmm You need a lender who still permits "hold backs"? Hmmmmmm
If you simply enjoy doing online what you used to do by telephone, return to GO. |