By Tammy Engel
Mortgage Advisor
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Mortgage Matters
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Twice this week my local quote was beat an online/mail lender. Once was for a reverse mortgage, and once for a plain refinance.
Be sure you are talking to a local mortgage advisor before you latch on to a solicitation for your home loan business. In both cases mentioned, the structure offered was of much greater benefit to the bank than it was to my clients.
For the reverse mortgage, the mailed plan offer was at a low up-front cost and a full draw of the available benefit. It looked great if the cost was the only point of comparison, but the home owner would have to take $82,000 at the close of escrow. Thing is, he only wanted to draw less than $1000 at close, and set up a monthly income stream from his equity. My loan had the usual origination fee and the small up-front draw, as he requested.
Doing what the borrower intended means he has a small loan balance to begin with, he gets his monthly draw for the next fifteen years, and he’ll get more “available line of credit” each month.
Here’s the difference: The mail lender made him take the full draw at the beginning of the loan: His balance was maxed out from “go”, so the bank made the most interest income for the longest amount of time. To boot, he no longer had the amazing benefit of letting his available line of credit increase over time. It’s one of the best features of reverse mortgage.
Yes, this sounds like Greek to those not versed in reverse lingo, but believe me when I tell you the mail offer really did a dis-service to my client, and it made me angry that he was not informed about other options that would better serve him.
The plain refi was a phone solicitation to a repeat client from the bank that holds her loan. “We noticed you could refinance and save ... blah blah blah.” When she asked to see the actual figures, it blew my mind. Keeping the loan local generated a much more honest quote – the bank cut short on realistic figures for interest, taxes and insurance. Better yet, my fees came in over $1100 less than the bank. Thank goodness she phoned me to compare.
Everybody wants your home loan business. Before you take the leap based on them contacting you, take time to speak with your local mortgage advisor. We’ll eventually run into you at the grocery store, so we take much more care in making sure you’re best served by the financing we can provide.
Tammy Engel is your local Mortgage Advisor and has been certified by USA Cares as Military Housing Specialist. Contact her at 661/822-7325 for help with purchase, refinance, and reverse mortgage.
