DallasLoanGuy’s - Texas Home Loan Weblog

 When Banks Compete, You Lose?!?!?! Huh? How can that be? Didn’t Lending Tree tell me differently? Yes they did!!
And they are kind of right, banks competing for your business does help you obtain a lower rate. Borrowers should shop around, getting a quote from both a bank and a mortgage broker. Compare what you have been offered and make an informed decision….But if you use one of the 4 or 5 companies that Lending Tree ‘sells your information to’ then you have to cover their overhead that came from Lending Tree. So, now that you are getting this info, you can make an informed decision about exactly ‘how’ to shop around and ‘how’ to engage a lender/broker.

First, lets look at the facts, it takes a considerably amount of money for a broker/lender to sign up with Lending Tree(or the many other lead generation websites). Thousands of dollars!! $10,000 is a number that I have heard from people who have used them to get leads. Then on top of that there is a fee per lead or a fee after the loan funds which can be in the hundreds of dollars. Who pays that? Do you think the lender/broker pays all of that money just so they can offer you the same rates as everyone else? Or do you think they have figured in the costs associated with buying your information when they offer rates and fees? I bet it is the latter….

Next, let’s consider why people ‘buy leads’ from Lending Tree. Do you think maybe it has something to do with the fact that those loan officers aren’t getting enough referrals from their friends, families and networking partners? It sure does!! Actually, these loan officers that buy mortgage leads are typically new loan officers who haven’t built up a network of influence for referrals. Basically, they buy leads because no one is sending business to them!! Do you want to trust your most important financial transaction to rookie loan officer? I wouldn’t. Now, while there are some very good loan officers who use ‘purchased leads’ as a way to diversify…. I believe that most consumers can do better for themselves by getting referred to good loan officers and doing their own comparison shopping without letting a lead generation website add on some costs.

Have you figured it out yet? Lending Tree spends millions of dollars on marketing/advertising to get the phone ringing. They cover those expenses by selling your information to a bunch of ‘wet behind the ears’ loan officer so these rookies can handle the most important financial transaction that most people will ever make!!

Lets take a pause. Let that last statement sink in………. kind of scary, huh?!?!

Lending Tree is right, when banks compete you win but they left out the part about how thousands of professional loan officers in the business can offer better terms and rates without the added expenses from the lead generation companies.

So, how do we find a loan officer to handle this most important transaction? How do we know who to trust? As you may have guessed, the DallasLoanGuy has some advice on that topic.

First, I always suggest to folks that they ask friends and family or maybe a trusted co-worker who they closed their home loan with and how they felt about the whole transaction. Next, try asking someone like your CPA or Financial Advisor. These folks know financing. They may even have a relationship with a trusted lender. Realtors are also a good source. They refer business to loan officers several times per month. And with many transactions under their belts, they certainly know who is competent and who is not. Now, that you have been referred…. What’s next?

Mortgage Bank or Mortgage Broker? Which is right for you…? Most borrowers these days have seen better rates/fees through brokers. Direct lenders can and do offer competitive deals, but usually those are for the ‘vanilla borrower’ who has a bag down payment and no job gaps or other issues that make their deal unique. But how do you really know for sure? Get a quote from one of each. Compare the ‘Good Faith Estimate’(GFE) for rates and fees. Pay particular to the fees numbered in the 800’s. The other fees are charged by third parties and the lender does not control these costs. Don’t get suckered into a loan with low third party fees to only get surprised later. Need help? Your realtor/CPA/financial advisor can help you compare the GFE from each loan officer to determine which is the right deal for you.

Remember, this could quite possibly be the most important investment in your portfolio. Do your homework and don’t be afraid to ask questions.
Tom Burris
DallasLoanGuy.com
Dallas, TX
“A Home Loan for Every Texan”
http://www.dallasloanguy.com/