LENDER ADVERTISING CLAIMS ARE OFTEN MORE HYPE THAN REALITY.
LET’S TAKE A LOOK AT a few…
Salary-Based loan officers:
Lenders will claim to have salary-based loan officers. The implication is that you are not going to be dealing with a pushy commissioned salesperson that needs to make a sale to keep food on the table next month.
In reality, no lending organization is going to keep a loan officer on staff that doesn’t make sales and close loans. The salary-based loan officer is still under pressure to get customers to sign up and say yes.
Even if the mythical no pressure salaried loan office existed, is that what you want?
Which would you rather have pushing your loan through the complicated underwriting process: A guy that gets paid regardless of whether your loan gets approved or a gal that only gets paid by getting your loan approved and closed? Yes … that’s a rhetorical question.
NO CLOSING COSTS:
Any lender can provide you a no closing cost loan.
However, the no-closing cost option in not cost free!
You pay for it with a higher interest rate and higher monthly payments.
Over time, that higher payments may easily exceed the closing costs you avoided paying at closing.
Doing a loan with no closing costs can make sense. The shorter the time you expect to be in the house, the better off you are to take the higher payment in exchange for getting rid of up-front closing costs. Or, you may want to conserve cash now even if it will cost you more in the long run. However, always keep in mind that there is a cost associated with any loan where your closing costs are reduced or eliminated.
SKIP TWO MONTHS PAYMENTS:
Any lender can do this for you when you refinance a current loan. Example: Close your new loan on March 1st. You won’t make a March payment on your current loan because it gets paid off that day. New mortgage loans don’t have a payment due for the month of closing or for the following month. Viola … you’ve not made a house payment in March or April on the old loan or the new loan. You’ve skipped two months of payments.
You have not, however, avoided the cost of those two payments.
Skipping the March payment on the old loan makes that loan payoff higher than it would have otherwise been. Closing early in the month on the new loan makes the new loan’s closing costs higher. Missing two principal payments in March and April makes the loan balance on the new loan higher. By the time May 1st rolls around, you’ve shelled out just as much money as you’ve saved by skipping two payments.
We are not say it is bad to skip two mortgage payments when refinancing…we are just saying it is not ‘free’. It can be beneficial for temporary cash flow reasons.
Choosing a lender based on some advertised competitive advantage does not make sense. Any program or technique promoted by one lender is generally available from any lender and the various advertised features may not be all that advantageous anyway.
With David Hutton, you benefit from a higher accountability as I want to develop and preserve a long-term relationship with my clients.
For more information on mortgage lending for a purchase or refinance, please call me at 303-596-3835 or visit www.coloradosbesthomeloans.com