Do you want the lowest rate possible? In the long run it may cost you more than you're willing to pay!

If you are shopping for the lowest interest rate in town, let me assure you this article is for you. Following will be the real truth about rate shopping according to Wayne's world.

Unfortunately, many times the dream of home ownership is never achieved because of unaware borrowers looking for the lowest rates in town.

The Phone Call.

Here's a typical example of a phone call I received today. 'Hello, RATEseekers.com,' I answered. The party on the other end whom I'll refer to as *Joe rate shopper* asked 'I saw your site on the internet and I was calling to find out what is your lowest 30 year fixed interest rate you offer?' 'Well,' I said. 'It all depends on many variables that are difficult to determine over the phone. The first thing I need to do is to pull a credit report to see what your credit scores are. This will give me a preliminary idea about your financial willingness to pay back debt. The second thing we need to do is to figure out your ability to pay back the debt which is determined by your income'.

'I have excellent credit,' Joe rate shopper snapped.

Now, here is where I say to myself, 'If I had a nickel for every time I have heard this I'd be retired'. You see, Joe rate shopper hasn't told me yet that his son messed up his credit a *little* bit but still wants the best rate in town and is expecting me to work a miracle for him and then do it for free!

What is most important to you? A low interest rate or a loan approval?

You're probably saying to yourself that Joe rate shopper's situation would never happen to you. And you're probably right. As a matter of fact, I even thought of listing 101 things that could go wrong with a loan transaction and DO! But if you were like the average person, you would cross out each mortgage problem, ruling out the possibility that it could never happen to you. The reality is, that the list would go on forever because everyone's situation is different. I have never had two loans that were the same.

Well, Joe rate shopper ended the conversation abruptly when I couldn't beat the rate he claimed he was getting. So he hung up on me.

The big problem with shopping for a rate is that they change; sometimes twice a day. The rate that was quoted an hour ago may no longer be available. Some rate shoppers haven't even submitted an application yet and most mortgage company lock-in dept's need a completed and registered loan application before they will accept a rate lock-in. So it usually takes a day to get a fully completed loan application back. A new day means new rate quotes.

I refer to this because I have lost loans due to rate quotes. Rate shoppers call me up to tell me that *Bank Utopia* just quoted them 1/8 or 1/4 point less than my original quote. Then the phone goes silent because the caller is waiting for me to drop my rate to beat their quote. At this point, I have to make the borrower aware that just because they have been offered a very low rate doesn't mean they will receive the money to buy or refinance their dream home!

What good is a very low interest rate if you cannot get loan approval?

After all, what good is a very low rate if you can't get approved for the loan? Worse yet, getting denied a few days before closing...after arranging all the movers etc... What a nightmare! I can't count how many times I have heard these horror stories. Just to save 1/8 or 1/4 point! Is it worth it? Where talking $5 to $30 dollars per month. You might be saying to yourself $5 to $30 over thirty years ads up. You're right. But on the average most homeowners move every 3-5 years.

Lets take a look at the alternative. Getting denied and having to rent. A renter will earn thousands by simply purchasing a property. (e.g. equity buildup, appreciation, tax benefits.) When it's all said and done and they close on their new home, they will be making money, not losing it!

How about the borrower who already owns a home? Most have already been through the loan approval process and are aware of how tedious and encumbering it can get . Clients have thanked us gladly because they have the piece of mind in knowing that if any obstacles do surface we have the knowledge and expertise to solve them. Plus, they still receive a competitive rate!

Sadly, there are times when I follow up on past clients who went astray to another lender because they were offered a lower rate. Only to find them still renting or haven't closed on their home yet because of this or that.

The bottom line is... that a very low interest rate means less money in someone's pocket. My question is this? How hard is a lender going to work on your behalf if they are earning very little in profit? As the old saying goes... 'You get what you pay for,' applies to this industry as well.

Don't be fooled by Teaser Rates.

Based on customer feedback, reports indicate that there are young aggressive companies offering low teaser rates just to get an application submitted to them. Then the mortgage company worries about trying to close and fund the loan after the borrower has committed to them. Collectively, unaware borrowers are totally exasperated with all of the additional documentation they continually had to get because of lender's mistakes that should have been solved at application. Compounded with the false promises of closing a loan is enough to make any borrower give up on the dream of home ownership.

Also, past loan statistics indicate that 1 out of 20 loans are simple loans. Where a person indeed has excellent credit and income stability and we have a quick and easy closing. Normally what happens, while processing the preliminary application and collecting all the required documentation, obstacles start appearing from 'the Land of Oz.' Obstacles that can easily make the difference between approval and denial if not handled wisely.

Each loan is a very complicated puzzle. All the pieces are not available in the beginning. Many times we have to solve a problem (s), then we are rewarded with another piece to the puzzle. Excellent problem solving skills are required to close loans.

We often have to tell a story to an underwriter about certain borrower's predicaments. Even when it comes to minor derogatory credit issues. The storybook must cover the topics of *What happened, * *What the borrower did to immediately solve the problem, * and *Why this Problem could never happen again. * Then, out of the 192 banks, we submit the loan package to the bank we know will give us the least resistance. Sometimes loans are approved based on gut decisions from underwriters. I have, in the past, submitted a loan package to two different underwriters and received an approval from one and a denial from the other.

So you say you have perfect credit? Great!

Or lets take the perfect credit, perfect income borrower. I have submitted a loan to two different underwriters and one would condition the loan for 15 unnecessary pieces of documentation (which inconveniences and exasperates borrowers) while the other underwriter gives us a clean approval and all we have to do is go to a painless closing.

After being in this business for as many years as we have, we have built long-lasting relationships with various underwriters. We have learned their idiosyncrasies. What they like, and what they don't. We are able to understand what documentation each underwriter needs for a loan commitment and we give them nothing more and nothing less..

Buy the way, most loans are bought and sold many times over. We sell them to various banks and investors. They in turn package them up and resell them on the stock market as mortgage securities. Therefore, the days of going to your corner bank and getting a loan on a handshake and/or personal reputation is over. You may be the greatest person in the world but underwriters are looking at numbers and no-nonsense case-by-case scenarios. Hence, the importance of having someone competent working on your behalf representing your best interests through the loan process.

In other words you can go to court representing yourself as an attorney. In doing so, you try to escape attorney fee charges. But is it a wise thing to do?

We are an honest company that will bend over backwards for our clients. If we cannot secure a loan commitment for you, it simply cannot be done. Plain and Simple. Not only will we work hard on your behalf, you will also receive a competitive rate.

Well that's it! Thank you for your attention and time. Please bookmark and check back for another issue into the world of mortgages according to Wayne's World!

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