Realtors and Mortgage Nightmares

Ask a seasoned Realtor about their buyer’s mortgage experiences and they will tell you of the nightmare borrowers have experienced at the closing table.

Repeatedly, we have witnessed the sticker shock of a borrower’s realization that the mortgage fees are very expensive.

By law, the mortgage broker is supposed to give the borrower a good faith estimate of the closing fees.  This is called a loan estimate.    It gives a detailed list of the fees.  These fees are broken down by those that can be shopped for and those that are not negotiable.   There seems to be huge differences in fees for those who get a loan estimate and those who find out the fees at the closing table.

When you are at the closing table, you are under contract to close on time, buyers have movers waiting, they have logistics that have been weeks in the making, it is too late for them to go back and negotiate the fees on the mortgage.  So repeatedly, the buyer takes the deal, because they have no choice.

SO, what is a realtor to do?  Many realtors do not give referrals.  I do not recommend my roofer, although he is great, I do not recommend my electrician, and I do not recommend mortgage brokers.   No matter how good they have done in the past, it seems as soon as you recommend a vender, they drop the ball, and it reflects badly on you.

I always ask…who do you bank through?  Do you have a credit union account.  Do you know of a lender?  Have you bought a home before?  Who did you use, were you happy with them?

All buyers that are paying with a mortgage get a pre-approval letter in writing.    We, the realtor, must advise them to get the loan estimate, in writing as well so that the borrower won’t get whacked at the closing table. 

When they get the pre-approval, we realtors have a chance to be a hero.  By insisting that the buyer get a loan estimate, the buyer will KNOW what they are getting into.  They will know the fees.  They will not have sticker shock at the closing table.  And very importantly, they can compare the loan estimate to the actual closing fees, and they can then fight the fees, if they deviate from the loan estimate.

Finally, to be a real hero to the borrower/buyer.  Have them shop around for the mortgage. 

We shop around for the best car deal, we shop hard for the best deal on a home, but buyers do not seem to shop around for the best deal on a mortgage.  When you apply for a mortgage, they may do what is known as a “hard credit pull”, it will impact your credit score.  Mortgage brokers do not want you to shop around for a better deal.  Of course.   They want you to believe that the fees are fixed and nonnegotiable.   They would like you to believe that the fees will be the same wherever you go.  Your credit will be impacted even more if you make multiple applications. 

If the company is doing a “soft pull”, it won’t impact your credit and your name will not be sold by the credit reporting agencies to other lenders.  And a fact they won’t tell you is if you do multiple hard pulls for a mortgage within 45 days, it only counts as one pull.  Companies that do a “soft pull” must pay the credit reporting agencies extra for that service.  So be sure to ask if the lender you are using does a soft pull or a hard pull, so they won’t be bombarded with calls from lenders.

Randy                                             727-409-4663   (409-home).

Randal Jenkins

Rocket Mortgage NMLS #205-3417

Coldwell Banker F I Grey and Son Residential

5636 Grand Blvd

New Port Richey Fl 34652