Home Loan Guidance Topics

Ask Around About Potential Mortgage Sources
Ignore "Friends in the Business"
Pay Attention to "This Person Got Me a Great Deal"


Some of the worst horror stories of people losing money when getting a home loan involve "a friend of the family" a "friend of the real estate agent" or some other "friend in the business." People seem to throw the term around as an acknowledgement that the home loan process is a tough one, and you need to have "a friend you can trust." This is a shoddy substitute for not doing your homework and it could lead to you spending far more than you should.

When buying a stereo, do you think of the salesman at the department store as a "friend in the business?" Do you think about needing a "friend in television sales" or a "friend in groceries?" Of course not. The mortgage professionals are simply people working in loan sales, service and administration. The more you think of them as your "friends," the more you will not double-check their work, and the less likely you are to comparison shop. They hate when you comparison shop, but they won't ever tell you that.

The real estate agent is not a person that can provide you a loan at least as far as we've seen from state to state. However, the real estate agent, or "Realtor" could provide you the names of certain mortgage sources. You shouldn't totally rely on their recommendations either. The mortgage broker may claim that this Realtor/mortgage broker relationship ensures that the mortgage broker will get the best deal for you. Wrong. The mortgage source and the real estate agent need to get the deal done to make money. If you get your loan and buy the house, regardless of the interest rate or cost in closing fees, the real estate agent will make his or her commission.

The referrals that people have found to be most valuable come from other people who have personally used that particular mortgage source whom they are recommending. Add those recommendations to your Long-List of mortgage sources. Unfortunately, even that recommendation is not enough, because the referring person may be in a totally different financial situation requiring a different kind of loan than you do. Different mortgage sources seem to be better with different kinds of loans, so the only way to be sure is to comparison shop. Further, they should refer an individual, not a company. Many times, we found a particular branch to have very good and very poor mortgage brokers under the same roof.

Don't rely on plain referrals. Don't rely on "friends in the business." Spend the time necessary, prepare well, and you'll improve your chances of getting the best deal possible and potentially save yourself a lot of money.

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