I had a conversation the other day with a friend who used to work for a rival wholesale lender. Unfortunately he didn't survive the blood bath of the mortgage industry melt down but he still loves to tell war stories.
We discussed the fact that the playing field has pretty much evened out in the past year. No lender has a product that sets them apart from the rest. You have your conventional lenders, your commercial lenders, your hard money lenders. You might happen upon a lender like me who offers several of those options but in each option set, the difference between me and my competitors is not great in terms of the products we offer.
If product from lender to lender is relatively the same, what do we have to offer to set ourselves apart from one another? That's easy. Price or service. I talk to mortgage brokers all day, every day. I even go home to one at night. They would all like the best possible service and the lowest possible price. Let's have cake and eat it too!
Seriously, as a business person, you have to individually decide which is more important to you. The best possible price may come with a 3-4 week turn time in underwriting. The fastest underwriting times may come with a price that is 100 bps higher than your best priced lender. You may find a middle of the road lender with so-so turn times and a decent price but they may consistently approve your loans with conditions you cannot meet.
Why, oh why can't we have it all? To put it in a nut shell, service costs money. To have super fast turn times, you need more operational staff. To have fair underwriting decisions you need to have funding flexibility. To offer the best price you may need to cut back on key operational items. Knowledgeable account executives who can guide you and your loans through the complicated guidelines that are the norm in today's market are paid more than telemarketers.
What is the most important thing? Closings. It's up to you to decide the most effective way for you to achieve them. Just keep in mind that the lender who most suits your needs on one transaction may not be the best one for another, especially if you are dealing with a purchase transaction that has a drop dead date.
Beth - Well put. Some of the most appealing 'pricing' out there is from entities whose service pretty much sucks. Sorry, couldn't think of a more articulate way to put it. Quoting the best pricing in the world is wonderful, but if the loan doesn't close ... it isn't worth much at the end of the day. I'll take service over price the majority of the time.
Jason- I typically agree that service is more important than price but in the case of a Rate and Term refinance sometimes the price is the only thing that makes the deal work. My point is that the days of one size fits all are over. That being said, you know who has the best service!
From a real estate standpoint my primary concern it getting the buyer into their new home as affordably as possible. Consistent performance is what I look for in a lender.... If I know going into negotiations that the mortgage pro needs 2 or 3 or even 4 weeks for commitment I can set the dates accordingly so in minimizes the stress on all parties.
Dan- I completely agree. I can't think of anyone who wouldn't. That being said, not every Realtor can negotiate those terms. You'd be amazed at the amount of 30 day contracts I see.
There are a number of wholesale lenders who take 3-4 weeks to come to a decision on a loan file and that decision is not always favorable. I often get frantic calls from mortgage brokers days before the contract expires. Lender A had the file for a few weeks and turned it down, lender B had it for another few weeks and needs a new appraisal.
I guess my point is that during these turmoil filled times it is a good idea to pick what is most important on each particular deal and don't put all your eggs in one basket.
Seriously? You don't think we can have it all with just one lender? I've been working with one pretty consistently for quite awhile and she performs magic of all kinds. Especially with her customer service. One of her best qualities is her navigational skills - whatever the scenario, she seems to know the short cut to getting us where we need to be on time. And she makes it look easy.
Mwa!
Beth...Price doesn't mean anything if the lender cannot close the loan. However, price does come into consideration. Service and pricing are the name of the game. I don't think consumers are expecting lenders to work for free, but they are price shopping. And they are not expecting their lenders to work magic, just expect them to do what they say they can do. I don't believe this is an unreasonable request.
Jennifer- Right back at ya! I do think as a realtor you can have it all. My post was more oriented to the loan officers who need to and do make the financing end of the transaction seamless to their referral sources (you) and clients. They are the ones who have to make those delicate balancing decisions behind the scenes.
Sandra- The best price in the world doesn't help if the deal doesn't close. Consumers also need to make decisions about price and service. Magic often doesn't occur in mortgage transactions these days, the little man behind the curtain retired back in 2006. Finding the people who do what they say they can at a competitive price, that's the trick.