Even well-meaning mortgage shoppers do things that drive brokers and lenders nuts. You might be surprised by what irks them.
Here are five gripes that mortgage brokers and bankers have about customers:
- Different types of borrowers require different loans. Someone who can put 30 percent down will probably get a lower rate than someone who can put only 5 percent down. People with poor credit histories pay higher rates.
So when someone calls or walks into a mortgage office and says, "What is your best rate?," the question can't be answered satisfactorily until the borrower answers some questions.
"They say, what's today's rate and closing costs?" says Jim Bradley, president of American Residential Lending Corp. in Atlanta. "They're kicking tires. They don't consider all of the parameters that feed into the situation. They want to shop rates like they shop other consumer products."
- Some mortgage applicants lie: inflating income, denying credit problems, minimizing big debts such as auto or student loans. It's difficult to get away with outright falsehoods because most mortgages require pay stubs, credit reports and bank records.
Then there are understatements.
"You always get into the question of credit," says Frank Previte, owner of Alpha American Mortgage in Fort Worth, Texas. "If someone says it's excellent, it's probably excellent. If somebody says there may be a couple of things, there are some landmines. If they say, 'Well, I have some credit problems,' you know they have lots of problems."
- "A pet peeve of mine," says a mortgage broker in St. Pete Beach, Fla., "is the unrealistic time expectations that Realtors give customers, or customers have themselves, about getting to closing."
A caller recently told him that he was buying a house and needed to close on the mortgage in two weeks. "I said not with me, you're not," the broker says with a chuckle.
The mortgage industry is busy right now, and underwriters, appraisers and title companies are swamped. "Thirty days is pushing it now," the broker says.
- Misunderstandings about rate locks cause hassles for lenders as well as borrowers. A rate lock is a commitment by the lender to lend the money at a specified interest rate within a specified period - often 30, 45 or 60 days and sometimes longer. The borrower might or might not have to pay a fee to lock in the rate.
Many borrowers apply for a mortgage and elect to "float" - they decline to lock in the current rate in the hope that rates will fall or remain the same before closing. Sometimes a borrower will float, and when rates rise, demand to lock in at the lower rate that had been offered a few days before.
It doesn't work.
"We don't allow the customer to game the system," says Al Engel, first senior vice president for Valley National Bank in Wayne, N.J. On the other hand, he adds, "I never fault somebody for asking."
- Finally, in the tradition of parents, teachers and bosses everywhere, mortgage professionals are frustrated by people who don't follow directions.
"Many times people hear what they want to hear, or they don't listen carefully," Previte says.
Previte prides himself on choosing his words carefully, but sometimes he finds himself in conversations where the borrower says, "but you said...." and Previte replies, "No, that isn't what we said."
All these are fairly minor gripes. What really frustrates mortgage brokers and bankers are other professionals in the system - unresponsive underwriters, slow appraisers, paperwork errors that aren't the fault of borrowers.
"In most cases, frankly, it's not the consumer who drives us nuts," Previte says, and that's nice to know.
* * * * The benchmark 30-year fixed-rate mortgage fell 8 basis points to 6.84 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.58 discount and origination points.