Trust Your GUT!!

When you are working with someone on the biggest financial decision of your life, make sure you know this person has your best interest at heart and is giving you advice that benefits YOU, not THEM!!

Transcript

SPEAKER_00 0:00

Hi, everyone, and welcome. This is Bad Bath and Banter, Arizona Real Estate Edition. I'm Amy Batten with Waterstone Mortgage.

SPEAKER_01 0:07

And I'm Ryan Batten with West USA Realty.

SPEAKER_00 0:10

All right, thanks so much for joining us today. I want to talk about, I I actually think we probably talked about this a little bit on other podcasts, but I'm gonna get into detail. I hate to say buyer beware, but buyer beware. Trust your gut when you're going through the process of purchasing a home or refinancing with your real estate agent or your loan officer. Yeah. Please trust your gut. If you feel like you're not being handled properly or you feel like you might be being overcharged, ask questions and get second opinions. And I have a couple really awful stories to tell you guys that will, you know, kind of confirm why I'm passionately telling you this. Just because you get pre-qualified from a lender does not mean you're obligated to them. A pre-qualification is just that lender telling you what your financing options might be. They may be right, they may be wrong. Not everybody is created equal. You know, I've had the pleasure of doing this for 28 years. I'm not everyone.

SPEAKER_01 1:17

You're only 29. I know. No, anyway, so I love you. She started early, folks.

SPEAKER_00 1:21

No, I love my 40s. I am I am 47. Okay. I'm totally comfortable with that number. No, I might be 47 forever. We'll see what happens. But no, I definitely do not want to go back to 29. I was pregnant with a little one and ugh, no, thank you.

SPEAKER_01 1:35

I had a DD though, so it was good.

SPEAKER_00 1:37

Yes, you did for about five years. Uh, in any case, um, so uh, you know, tr just trust your trust your mindset. Um, you know, just because someone's been doing this for two years does not mean that they don't know what they're doing and they're not gonna take awesome care of you, but it does not hurt to get a second opinion. And here is an exact reason why. So I had a client reach out to me, um, heard me on the radio, and said, I need to, you know, I need you to take a look at some paperwork. I just closed on a refinance and I'm worried that I did not get a good deal. So I'm like, absolutely, I'd be happy to look at it for you. I mean, you just closed on a loan, so I can't help you, but I can advise you. So I went out to their house in Gilbert and sat down with them at their table and went over their paperwork. And I was appalled to say the least at what I saw. I knew the loan officer that did their other loan. Okay. Um, and it's not someone I've ever held in high regard. Um, I am kind of a snob when it comes to our, you know, Arizona, Arizona lending market because I, you know, I just kind of know the background of it. And, you know, some people are incredible and some people are not. And that's okay. That's with every industry. So I'm looking at his paperwork, and it is a primary residence cash-out refinance bank statement program. I do them all the time. There's totally easy, simple. They had, you know, pretty decent credit scores, not nothing to light the world on fire. But their interest rate ended up being 9.875 on a primary residence cash-out rate.

SPEAKER_01 3:14

So, out of curiosity, what would be the going rate on at that point in time that they did that? What would you estimate?

SPEAKER_00 3:20

Their credit scores and they did cash out to 80% of their value. I would say at the most seven and a half.

SPEAKER_01 3:27

Okay. So they were, they were completely ripped off.

SPEAKER_00 3:29

I don't, yes, and I don't know why. Again, this gentleman works for a broker, and uh, you know, brokers tout that they have the ability to save you money and do things cheaper. Well, I have yet to run into one that can beat me.

SPEAKER_01 3:42

Well, so the point of a point of a broker is you're supposed to be able to shop, right? And so you can go to different lenders who's got the best deals and everything. Um, and and I don't know about you, but it feels like to me some of these brokers are taking them to who's the most expensive, who where that broker can get paid the most.

SPEAKER_00 3:58

Yeah, it's yeah, it's more about the broker's commission, the loan officer's commission than it is anything else. Um they probably are using companies that are giving them the best deal, but they're taking the highest amount of commission they could possibly take. So, you know, I estimate this loan officer probably made $18,000 on this one loan. That was a $400,000 loan. That's insane.

SPEAKER_01 4:17

That's what I estimate. That's insane.

SPEAKER_00 4:19

Now, it is what it is. You know, that's uh good for him. I'm I'm so glad he was able to make some money.

SPEAKER_01 4:25

So that's so let me just do the math, right?

SPEAKER_00 4:29

I yes. I've already done it.

SPEAKER_01 4:32

That that that's more than a real estate agent if it got paid full 3%.

SPEAKER_00 4:36

Yeah, they have um they have caps, but they do have the ability to go to the very maximum. That's yeah, that's awful. Yeah, and it did, it is unfortunate. So um this particular gentleman, he was referred to this loan officer by Guidas Church. And, you know, he thought, oh, I can trust him, I can do this. He said the the process was horrible. It took three months to get his loan done, um, which does happen. It depends on the situation, but it could happen. Um it doesn't happen very often though. Um it took him three months to get it done, and the uh, you know, the cost kept changing and the interest rate kept changing. And they didn't even, they said, now there are protections in place for this, so I I don't necessarily believe this, but the borrower said they didn't know the interest rate until the notary came with the closing package. Well, we're required to disclose it at least four times before closing, so this doesn't happen. So they probably just didn't really pay much attention, and that's why I say, buyer beware. This is your money, you should protect it. If you're going to hire someone to represent you on your financing that you don't trust, you have to be extra diligent and making sure that you're paying attention.

SPEAKER_01 5:43

Yeah, and I think you make an excellent point, Amy, in that um, and and this goes, you know, not just for the lenders, but for realtors as well. People like this is this is a major purchase. That is really, really is. Um, and and it's it's so it's a lot of money, a lot of LA cash, a lot of money that you're signing that you're gonna pay back. Um also same with a realtor. Uh, you know, these are people that are helping you facilitate this purchase. Um they're supposed to be acting in your best interest, and they're definitely not all created equal uh from an experience level, um, savvy, just some people are better at negotiating, so on and so forth. Um It's imperative that you interview at least three lenders and you interview at least three realtors.

SPEAKER_00 6:27

Agreed.

SPEAKER_01 6:27

Um and when you do the lenders, because it can, you know, it can get a little wonky in terms of understanding everything with a loan at times for for some folks. Um just do an apples to apples, very simple, basic, like say just a 30-year fixed conventional, 30-year fixed FHA. Give me some quotes on both those routes, um, and then have the next one do it and the next one do it, and so on and so forth. That's just that piece of it. But also when you're when you're uh consulting them, you really should act more like you're an interviewer.

unknown 7:03

Right?

SPEAKER_01 7:03

You should what are some questions you think that that these folks should be asking of these lenders to help them kind of identify which route might be best for them?

SPEAKER_00 7:13

Well, I think a lot of it has to do with uh personality and integrity. Okay. So I feel like, you know, reading the reviews, checking them up online, seeing if they have any complaints, um, that's really important. Um I mean, I can't tell you how many people come to me and have never researched me. I give them my website, I give them my my Zillow link, I give them Google where they can see all my reviews. Um, you know, I think it's really important that, you know, you're giving all of your personal information to someone. You shouldn't take it so lightly. Like I would never go online for a home purchase. Now I would for a car loan or a HELOC. So I guess it's neither here nor there. But for a home purchase, I would never go online and put my, you know, apply with a major banker uh Rocket Mortgage, or I would never, I would never utilize one of those companies. And the reason is they don't hire true loan officers. They hire order takers, they hire phone answerers. That's it. So if you have even one little teeny thing that might be a little bit out of the box, um the process is probably not going to be super fun for anybody because they just don't know what they're doing. Experience matters and they're not cheaper in a lot of cases than any other lender on the street. They're just what we call a big box bank, and so people go to them because of name recognition, but it doesn't mean that they're great lenders.

SPEAKER_01 8:33

So I think it's a pretty much a golden rule uh that if a particular business advertises like crazy, they they're passing that on to you. Right? They've got huge costs of the phone.

SPEAKER_00 8:45

If they sponsor, you know, football fields and sports teams. Yeah. There's a good chance they're making a lot of money. And it's a numbers game for them. I like the relationship side of it. So, you know, I'm very blessed to to have the clients that I do and they keep coming back. And now I've been doing this again for almost 30 years. They're sending their kids to me now, which is so fun. Um but sorry to get back to your question about uh about what questions they should ask. Uh, a lot of it has to do with background. How many of these loans have you done? Um, just like with real estate agents, how many homes have you sold? How many, you know, how many clients have you held? Yeah, what is your specialty? All of those should be questions, but people are so uncomfortable when they talk about their finances that they're afraid to rock the boat, which I think is so odd. If one more person says to me, I am so sorry for asking you questions, I just tell them, I am sorry that you feel like you have to apologize to me for me doing my job. That's literally my job is to answer your questions and make sure you understand everything. It is so weird how we approach lending and how we approach giving people our information and feeling uncomfortable about that.

SPEAKER_01 9:55

I think a lot of it is that it's unknown. It's unknown. It is, yeah. Right. And so people are uncomfortable with the unknown. Yeah. Um and they feel like they're being a pest, if you will. Oh my gosh. No. But really they should, because they you really want to you want to help increase their edification. Right?

SPEAKER_00 10:09

Like you Well, just make sure that they understand exactly what they're agreeing to.

SPEAKER_01 10:14

Now, for some of our viewers, though, yeah, for sure, but for some of our viewers who are going, yeah, but if I talk to three lenders, that's gonna ding my credit.

SPEAKER_00 10:22

They wait, first off, they do not have to pull your credit to give you some information. I never require to pull credit before I will talk to you and give you some basic numbers. Now, I always preface it with if what you told me is not accurate, then this doesn't apply. But here's what you can expect. Every lender should, every lender absolutely can do that. If they require to pull your credit, then you probably just move on to the next. The reason that they want to pull your credit is because they want to obligate you. You feel like your credit's been pulled, you need to go with that person. Um, that is not true at all. Credit agencies now, um, oh gosh, over the last 10 years, um, any mortgage-related inquiries within a 30-day period only hit you one time. So, not that I would ever recommend having your credit pulled multiple times, anyways, but you can have the freedom of shopping for at least 30 days and it not impacting your own. And not getting so do not worry about that. Please, please, please shop. If more people trusted their gut and said, hmm, I don't know if I'm really comfortable with this. I don't know if I trust this person. I couldn't get a hold of them for two weeks. Um, they were wishy-washy with their answers. Uh, just stop and just make another phone call just to make sure that you are confident you're moving in the right direction.

SPEAKER_01 11:37

Yeah, a little bit of time, a little bit of effort can save you thousands and thousands of dollars.

SPEAKER_00 11:41

It it would, yes. If I could get my hands on this particular gentleman or this uh husband and wife uh prior to them signing their loan documents, I probably could have saved them a ton of money. So ultimately, they pulled cash out. Their mortgage payment went up a thousand dollars a month.

SPEAKER_01 11:57

Okay.

SPEAKER_00 11:57

The debt they paid off only saved them like $800 a month. So you So they ended up and they didn't get any extra cash. So they ended up paying $200 more a month with to eliminate their debt. Yes, after everything was paid off. It literally made no sense.

SPEAKER_01 12:16

Aren't there rules in place to protect?

SPEAKER_00 12:18

No, not in that situation. And shame on I am gonna say if I wish I could say his name, oh my gosh. Shame on that loan officer for allowing that loan to close. That that should have never been allowed. There was no net tangible benefit for that borrower. But because they were pulling cash out, that eliminated the net tangible benefit requirement.

SPEAKER_01 12:36

Okay. Because that is their benefit. So I want you while we're on it, just speak to that real quick, the net tangible benefit if it's not doing a cash out.

SPEAKER_00 12:43

Yes. So we have to make sure as mortgage lenders that we're not just flipping and churning and burning your loans in order to generate revenue. So we have to make sure that you have a true benefit to doing the loan. This only applies on refinances, um, and it's called a net tangible benefit. So we were the industry requires a borrower to save at least a half a percent in rate and or mortgage insurance in order for them to refinance. So because it was cash out and it was a niche product, a bank statement loan, that did not apply for them.

SPEAKER_01 13:16

Okay. Uh and then you I I know this is true, but again, just for the for the listeners, for the viewers, um so you also go over with your clients. Uh you know, you you factor in the cost of the loan and what the recapture rate looks like and how they're where their breakeven is. Yes, yeah. So you know, it might, you know, it loans aren't free. Cost you a little bit of money to do loans, uh, but she'll lay it out for you, hey, you know, at this new payment, it could be 12 months, 18 months, whatever it is, but you'll you'll reap the benefits going back.

SPEAKER_00 13:50

Yeah, recover. So what what he's talking about is um we uh factor a breakeven point. So we take all of your closing costs and we divide that into how much your payment is decreasing every single month. So we determine at what point it'll be all savings. And from there, we determine whether or not it makes sense for you to refinance. So we always want it to be under 36 months. Always. We do not want your cost and your savings to be yeah, dragged out more than three years. So three years is kind of the sweet spot. Um obviously we would love it to be under 12 months, but it typically ends up being about 24 months. Uh, if you just have a normal savings with a normal, normal cost.

SPEAKER_01 14:30

Okay.

SPEAKER_00 14:31

But then we say, okay, make sure you're gonna if if you're gonna keep this loan longer than two years, this loan makes sense. If you're not, I wouldn't touch it.

SPEAKER_01 14:39

Okay.

SPEAKER_00 14:39

And I'm very different than most loan officers. They will try to sell you anything.

SPEAKER_01 14:43

They will, you know, and honestly, I I think that just having this discussion uh without you know talking specifically about what we've been talking about. Just if I was watching this and listening to you it sounds to me like you're way more thorough and way more detailed than what I see from a lot of loan officers.

SPEAKER_00 15:00

Aaron Powell Well, you do deal with other loan officers, so I'll take that as a compliment, but you're also married to me, so you're required to say that.

SPEAKER_01 15:05

Well, and and and you guys uh listening in, look so I I know I can feel it. I know I've I've talked with Amy, I know she can feel it. But you ever like talk to somebody, uh maybe looking at the possibility of doing business with them. And you can kind of smell the desperation.

SPEAKER_00 15:22

Yeah, yeah.

SPEAKER_01 15:23

Right? Like they really need this, and so you know, they're really pushing you to do it. Um I think we've all been there in our careers, especially early on starting out.

SPEAKER_00 15:33

Absolutely.

SPEAKER_01 15:34

Um but I gotta I gotta be honest, run. Run if you smell that, right? Because they they're not, they're they're not necessarily looking out for your best interest, they are looking out for their own. And I get it, there's a survival instinct, if you will. Um but when you deal with someone that, you know, they're not flip uh flippant about it, but they don't have to have your loan.

SPEAKER_00 15:56

Well, if they don't close one loan a year. Yeah. So it's not desperate that they close it. Um, that's always a better person to work with. Not someone who's just aloof and and blows you off and doesn't care about your business, someone who really cares but doesn't need it to survive. That's a really great spot, and that's a really great person to work with because you know they're gonna be honest with you and they're not gonna sell you something you don't need.

SPEAKER_01 16:16

No, they're not. And they're gonna look at it as, hey, you know what? I I'm not gonna worry about I've got to make my mortgage payment or, you know, buy groceries. Um I I I'm gonna worry about my client. I'm gonna do the what's best for them and and give them the proper guidance. I mean, it's it's you know, I mean, so that that should be in your interview process. That should be a red flag.

SPEAKER_00 16:39

Yeah. You would think it's a no-brainer, but it's not. I mean, I truly have conversations with people and I'm very easy. You know, I'm like, no obligation at all. I'll answer your questions. You don't have to do anything. And they just get so uncomfortable with asking any questions or pushing back on anything, or hey, what's this fee? Now I I'm very hands-on from the very beginning. So I'm one of those where I go over every single line of every single part of the process, of the fees, of the cash needed, of what you're financing. I go through every single line. Um, because again, it's your money, it's not my money. You need to make a sound decision based on being presented all of the details.

SPEAKER_01 17:21

All the information.

SPEAKER_00 17:22

Um they still get uncomfortable, like pushing back. And I'm like, no, there's no pushback. You're asking questions, they're valid questions. I get really uncomfortable when people do not ask questions. So all I can urge any of you who might be listening to this, uh be confident when you're, you know, you're giving someone business, you're allowed to ask questions. You're allowed to uh, you know, just be inquisitive and to make sure that it is a good fit for you. You don't owe anybody anything. If you are able to buy a home, if you qualify, you can use whoever you want. You don't have to use the person just because it's the first person you were talked to, or someone at your church referred you to them because they may not be the best fit, or they might be. I love when I hear success stories about people having really great lending experiences. I unfortunately hear more of, I knew, I knew I shouldn't have gone through with it, or I just had a bad feeling the whole time, or I didn't like the way they communicated with me and I didn't like their process. Um, you know, you you're just never obligated, is my point. Until it gets down to the end and you're, you know, let's say you're doing a purchase and you're under contract, you do owe it to the seller to make sure you close on time so you don't want to shop too late in the game. But I just you just have options.

SPEAKER_01 18:40

Well, we talk about it all the time, right? But the the lending piece, that's the foundation of it all. So so you really should be laying that groundwork ahead of time prior to getting out there and searching for any homes. Yes. Um, so all that interview process, all that selection process should have already taken place.

SPEAKER_00 18:57

Um it should have, but it's okay if it ha if you have a change of heart a couple days into the contract and you want to look around. I save deals all of the time, halfway through the contract where their loan officer either went back on, you know, bait and switch, which is very typical in our industry, um, where they, you know, quitted something and then came back and quitted something higher, uh different program, different fees without anything real changing.

SPEAKER_01 19:23

I would even say in the in just in all the volatility that we've seen in the market, it may not even necessarily be a bait and switch. It may just be that things are moving so rapidly and quickly.

SPEAKER_00 19:32

Yes, you should.

SPEAKER_01 19:32

You gotta communicate it for sure 100%. You should be communicating it. Um but there is some of that too, is a lot of volatility.

SPEAKER_00 19:39

Yeah.

SPEAKER_01 19:39

Right.

SPEAKER_00 19:39

So it's just important that you as a consumer just make sure you're protecting yourself. Um, it's really nice when you meet someone and you work with someone who you know has your best interest at heart, then you don't have to be so on guard. Um and I do know that my clients feel that way. I have no doubt about that. Um because I make sure, like I have talked people out of doing loans, I would say 25% of the time.

SPEAKER_01 20:03

Yeah, yeah. No, you do. Hey, it's not in your best interest. Absolutely. We should hold off, we need to wait. Um Yeah. And then also when you're when you're interviewing these lenders, when you're interviewing realtors, uh while it's a factor, cost should not be the deciding factor.

SPEAKER_00 20:20

No, it shouldn't be because there's just so many there's so many details in a real estate transaction, whether it's like he said, a real estate or loan. Um first you need to narrow in on the personality and the way they do business and that it meshes well with yours, and then talk about cost.

SPEAKER_01 20:36

Yeah, no, I mean absolutely. And you think just to kind of hammer that point home, um, if I was on trial for murder and the best attorney costs 10% more than just an average attorney, I'd pay the 10% more. You know what I mean? Because I want to make sure it's done properly and this is you know, this person's got a reputation and they uh they care about what they're doing. Like, yeah, so just to hammer the the cost isn't everything is cracked up to be. So just because your your uncle's, nephew's cousin got their license last year, yeah and they they'll do it for 1%.

SPEAKER_00 21:07

You get what you pay for in this business for sure.

SPEAKER_01 21:10

Unfortunately, you do.

SPEAKER_00 21:10

Yeah. So that's a very good point. Um the lowest cost provider doesn't always have the best results.

SPEAKER_01 21:18

No, no, no, no, huh. They don't. Um and don't get me wrong, uh, a professional who's worth their salt on in either uh discipline, um they're gonna do right by you. Yeah. Because they learned that it's important to take care of the customer. Because that guess what that customer's gonna do when they feel like they've had an excellent experience? They're gonna refer more business to them. Which is the lifeblood of what both Amy and I do.

SPEAKER_00 21:43

Yes, definitely. So yeah, I agree. So just really important protect yourself, ask questions, shop around. You are allowed to do all of those things because it is it is your money and it's your transaction. Um, and if there's you know ever a position where you want to, you know, get some professional. Professional advice. We would always love to help you. You can reach out to us anytime. Again, our website is keeping at realistate with amb.com. You can also text the word close, that's C L O S E to 620620. That kind of goes in with our radio show. But then you get an automated text back with all of my contact information. And you can reach us anytime. And again, no obligation. Like if you just have a couple questions or you want to get another opinion on, you know, a loan that you have that you're going through or a real estate transaction that you just want to make sure everything sounds right. We would absolutely love to help. Uh again, with no obligation. So, you know, reach out anytime, keeping at real estate with amb.com. Thank you so much for joining us today.

SPEAKER_01 22:44

Bye, everybody.