Working With the Right Mortgage Lender Saves Your Clients’ Money!

In this changing mortgage environment, there are occasions when a Loan Officer will get a call from a Realtor about helping their buyer secure a mortgage on a property they are buying and the Loan Officer is unable to do the deal for any number of reasons: they are not signed up with FHA or USDA Rural Housing, it is a condotel unit and there aren’t many condotel investors left, etc.

Recently, I have seen two different scenarios of the above that are NOT IN YOUR CLIENT’S BEST INTEREST: (1) the Loan Officer tries to convince the buyer to get a different loan type (or doesn’t even tell them that another loan would be in the clients’ best interest because they wouldn’t get paid if they had to send them elsewhere and (2) the Loan Officer calls another company to see if they can do the deal and then asks them to pay A LOT OF MONEY to the 1st Loan Officer just give the realtor the 2nd Loan Officers’ name and phone number!

I just closed an FHA deal for a client who wanted 100% financing; he found a house, the seller was unwilling to assist with any downpayment assistance, and the Realtor put the buyer in touch with their company’s in house lender. Because the buyer had some money that could be tapped into for the transaction, this lender only talked to the buyer about a 95% conventional mortgage at a rate of 6.625% with mortgage insurance. Based on this, the buyer would have had to put $12,500 down (the sales price was $250,000), and his payment would have been $1,536.86 P+I with $209.79 for mortgage insurance, with a total payment of $1,746.65.

The borrower, unaware that there were other options available, was content with that. However, I write a monthly mortgage article for our local paper and the buyer read it and called me. We then discussed an FHA option (he made too much money for USDA Rural Housing) and I quoted him 6.125% with no points and no origination fee with only 3% down. With the FHA loan, he only had to have a $7,500 down payment and, even with financing the upfront mortgage insurance premium into his loan amount, his monthly payment was $1,576.05 P+I with $101.04 for monthly mortgage insurance, resulting in a total payment of $1,677.08, a savings of $69.57 per month and he made a $5,000 less down payment! Had he invested the 5% that they were quoting him on the conventional loan for a down payment and done an FHA loan at 95%, his total monthly payment would have been $1,563.68 for the FHA loan, including monthly MI, a difference of $182.97 a month.

As a realtor, if you are selling primary homes, make SURE that the mortgage lender you are referring your clients to are able to do FHA and USDA Rural Housing mortgages. It can save your clients a lot of money in both the short and long term!

The second scenario involves a mortgage lender asking another mortgage lender to pay them a fee just for giving a realtor our phone number. I had this happen last week: Lender A called me and said she couldn’t do a particular mortgage but would give the Realtor my name and number if I paid her 25 basis points of the mortgage amount. This may not sound like a lot, but in this particular case, it would have been $2,250 FOR GIVING A PHONE NUMBER! On top of the obvious RESPA issues, the first borrower knew that this fee would have to be collected from the borrower – in fact, we have to have them sign a form stating that they know Lender A, who they may never have talked to, is getting a fee for giving their realtor Lender B’s phone number! Obviously, I gracefully bowed out of this deal!

My advise to you as a realtor: make sure you know the types of loan your mortgage lender referrals can do! As a buyer, make sure your lender is giving you ALL Of the options available – ask your Realtor what types of loans there are and get educated so that you don’t end up paying too much money!

Oh, and by the way: if we get a call and know that we are unable to do the loan but know of someone that can, I can assure you: we will refer you to that person AT NO COST TO YOU OR YOUR BUYER! I feel it is all of our best interest to get real estate sold and closed in this market!

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