“First step in avoiding a trap, is knowing of its existence.” Frank Herbert, Dune, spoken by Master of Assassins (chief security officer) Thufir Hawat.

Mortgage Strategy

For those spring house hunters out there, let me give you some advice on dealing with mortgage brokers, and how not to fall into their traps they lay for the unwary.

It was last year, in the early spring, that I began searching for a house. I knew I had to get my financing setup first before serious looking. Marsha Stephens, my real estate agent, suggested Choice Lending as a mortgage broker. Marsha is a great agent by the way, going all out to get my house closed on time; telling me afterwards that this was her most difficult deal to date.

So, I got all my paperwork lined up, everything filled out, stamped and ready to go. I found my house; they accepted the final offer and the closing date. Then with the closing less than a month a way, feeling lucky, I faxed in my mortgage rate 30 day lock in form and ordered the appraisal.

Unbeknownced to Choice Lending, I was working with another broker and a large bank on the same deal, going through the same process, same paperwork. I got them to use the same appraisal ordered by Choice Lending as well, which saved a few dollars. Usually a lender requires their own appraisal order, but in this circumstance they accepted the one already completed.

You ask why? Time and again, I’ve head this identical horror story from prospective home buyers. Right at the last minute, within a week or less of closing, their locked in interest rate could not be honored, due to some deleterious mark on their credit report. This same credit report, usually ordered by your broker himself, had in his possession for months on end. This happened to my brother when he bought his house and it happened to two of my house buying friends. I wasn’t going to get trapped and sucked down into their little game.

And guess what, just five days before my closing date, wam! My locked in interest rate could not be honored, due to some deleterious mark the lender found, but would require a ¾ points increase. I wrote the lender an email thanking him for his time, saying I will no longer be requiring his services and will be closing with a competitor on time. He freaked, called back, saying how much work he put into it, and so on. I held firm and didn’t hear from him until the next day, saying there was some mistake, they pulled ‘different’ credit reports (aren’t there only three?) and they would honor the original rate, with no lender fee thrown in.

I took it. Why? Because its business and he still had the best offer. I had nothing against the guy trying to pull a fast one, trying to make a little more and getting caught trying it. The moral of the story is: the primary concern of a broker is making money. The customer will always come second, every time.

Heed my warning!