What is in Your Sock Drawer? And what Does it Mean for your Mortgage?

In one of my favorite Dilbert cartoons, someone asks Dilbert what he will wear to a wedding. He responds, “Whatever comes up in the rotation,” which elicits an “ARRRGGHH” from the gal who asked the question.

I can identify with Dilbert. I am a little bit like him, but just with shirts. My family has given me shirts every Christmas and birthday for as long as I can remember. Thus I own a lot of them, like them all, and want to wear them all.  So every morning I take something close to the left end of the rack and put clean ones at the other end.  By the end of the season, I’ve worn all of my shirts several times. 

I know a guy who has only one color of sock -- black. He readily acknowledges that some of his clothes don’t match well with his socks, but he doesn’t care. I’m more complicated. I buy brown, blue, and grey socks, but they are all the same brand so I never have a “matching” problem. If one gets a hole in it, I just throw away that one.

I suspect that people who organize their closets like that tend to be a) male and b) engineer types, like Dilbert.  Can you imagine a woman using that method of deciding what to wear today? Never! I repeat, NEVER! Women approach the “what to wear” question differently. It’s not that either of us is right or wrong; it’s just the way our brains work.

What does this have to do with real estate and mortgages?  I think it’s just another manifestation of something that interests me: how people gather and process information and how they make decisions.

When my phone rings, I have no idea what the caller expects from me.  In most cases, it’s a referral from a friend or someone who read my book who is absolutely elated to find out that I’m still in the mortgage business. In other cases it’s someone who, perhaps like Dilbert, simply asks, “What are your rates?”  I get the feeling that those folks couldn’t care less who I am. What would they think if the janitor answered the phone some evening? Would they know?  Would they care?

The objective of all mortgage shoppers is to get the best deal they can get, regardless of what shopping method they use. The question is: “What method results in the lowest overall costs for borrowers over the long term?”

There are several items that need to be discussed to answer this question. First, most borrowers shop for the wrong loan, one that isn’t quite suited to their goals.  They may get a good deal, but if it’s the wrong loan it will cost them tens of thousands of dollars over the long haul. Who is going to help educate them about a better choice? Some kid making minimum wage who gave them a hot quote? Not!
 
The second has to do with shopping among lenders.  I recently got a call from someone who had been referred to me by a relative of his, a recent client of ours.  I was grateful that he had referred the man to us, but I didn’t feel much of a connection. I got the idea that my name and phone number were just one line on a list of lenders to call.  This individual thinks if he makes enough phone calls that he will be able to find a better deal than I could find for him.

The third has to do with what a friend refers to as “hand-holding.”  In many organizations, large banks in particular, you really are just a number. The person you deal with at the branch doesn’t remember your name when you call with a question. I think that most people prefer dealing with someone who actually cares about them and will go to great lengths to make sure the transaction proceeds smoothly and closes on time. 

The fourth items is honesty and trustworthiness. Most people think that their loan officer is working for them, but this definitely is not always the case. The average borrower simply doesn’t know what to look for and can’t see when he is the victim of a minor scam that put more of his money in the loan officer’s pocket. 

In conclusion, even though I am an analytical guy, 26 years in this business have taught me that borrowers who concentrate on finding a trustworthy loan officer with whom to build a relationship end up getting much better deals than the Dilberts of the world who think they are doing the right thing by just gathering a mountain of facts.