Good, Better, Best in the Mortgage Industry

I can remember the Sears catalog of my childhood when three different quality grades of product were offered: GOOD, BETTER, and BEST.

Prices varied according to quality. This was an attractive tool because it allowed you to choose based upon your budget, the intended use, and how long you wanted the product to last.

My Dad beat into my head the rule that you bought the best you could afford. That was great advice and it’s one I passed on to my boys, teaching them to buy Craftsman tools, for example. You could get a free replacement in the unlikely event you broke one.  When you buy cheap tools, they break and you throw them away and have to buy another one. Two cheap tools cost more than one good tool.

Today the GOOD, BETTER, BEST trend has disappeared and has been replaced by a mass-market, mass-consumption culture where every company would have you believe that its product is best. It’s just not so. Consumer Reports tests and then gives unbiased rankings of everything you might use. PC World magazine gets service reports from 60,000 users who rate such things about computer-related companies. The fact is that service levels at most places is not very good, by whatever measure you use. 

No one has ever done this for mortgage companies, but the results would be horrific. Yet when people go shopping for a mortgage, they ignore the ample evidence that lenders just don’t treat their customers and prospects well. This seems to me to be a ludicrous statement when you consider that the mortgage industry has some very dangerous characters in it, all of whom sound really smooth on the phone. However, it’s those guys who set off an economic nuclear device that will, according to the latest estimates, cause over $600 billion in losses and precipitate the foreclosure of over two million homes. 

I have news for you: Mother Theresa didn’t train these people. So why is it that you still think that they will all treat you well?

I think that it’s because to check on service introduces a level of complexity to the process that people are just not prepared to deal with. You can’t ask people, “Can I trust you?” They will all say, “You can trust me,” but some of them are lying and you can’t tell. Those lies WILL hurt you.

What’s the poor borrower to do? The answer is simple: Stop shopping for a mortgage as if it were a thing. Start shopping for someone who can provide a service. The service is to HELP you get the best mortgage for your family. Notice that this is a different process than calling lenders and collecting rate quotes. Here’s a truth that will help you:

Honest, trustworthy lenders are all trying to stay at the competitive end of the pricing spectrum. The rate difference between one and another is very small, too small to worry about. What is important? Ahhh, that’s where the advice part comes into play. That’s what “service” means.

Remember that lenders usually have rate sheets that run anywhere from 5 to 8 pages long. On each page there are a half dozen programs, perhaps more. I can guarantee you that you picked out a price on one product on one corner of one page of that long rate sheet. Since you are not informed about the process – something you and I are trying to fix right now – you probably won’t make the best initial choice. 

You are going to spend a few thousand dollars upfront. That’s no big deal! But over the next ten years you might spend $200,000 in interest! That’s a big deal, and that is where an expert will help you save money in ways of which you are completely unaware. Remember: You don’t know much about this business. Your job is to find someone who DOES and who will put his knowledge and experience to work for YOUR benefit.

Among the 100,000 Loan Officers, there are people who are GOOD, more who are BETTER, and perhaps 10% who can truly be called BEST. Go get one!