Posted by: msundermier | February 10, 2017

I Hate To Talk Politics, BUT…

We have all been warned of the three taboo conversation topics: sex, religion, and politics. Touching on such subjects with others often leads to conflict or misunderstanding. Wikipedia even admits on their web site that “its nearly impossible to provide a neutral point of view” on these matters.   And yet, NOT discussing politics in our current climate is nearly impossible as well, even for a guy like me who wants to focus on economics rather than politics.

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All of these “us” vs. “them” antics are exhausting, and dangerous.

 

So here it goes; my bold attempt to lace politics into my Part-Professional, Part-Personal, Rarely-Ever-Political blog.

Political news is everywhere!  Its even prevalent on financial (see below), fashion (peek at GQ’s polarizing Facebook video page) and sports (Google “Ass or Asset”) news sources .

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Check out this screen shot I took last night when visiting www.Money.CNN.com, my preferred source of financial and market news. Every single one of the top 10 headline stories covers some element of President Trump’s administration; they even have a page titled “Trumponomics.”  The unavoidable reality is that our politics are shaping our economics, including mortgage rates.

As I’ve been preparing my Annual Market Forecast post (coming soon!), I’ve realized I must understand our political affairs in order to best counsel my clients about the recent and potential future changes in interest rates. For example, mortgage rates and other financial markets have been incredibly volatile since Election Day due to the foreshadowing of how our world may be different under a Trump Administration. In fact, the term “Trump Effect” has been coined as a reference to the markets being indirectly influenced by President Trump. For example, on good stock market days, you’ll read headlines such as “Dow closes above 20,000 for first time as Trump actions spark rally” and “Trump tax talk lifts Wall Street to record high.” And on down days you’ll see “Will Trump kill the Trump rally?” and “Is Wall Street starting to show Trump regret?”

Like it or not, our economics are closely tied to our politics, and it seems that in the near term market movements will be directly correlated to President Trump’s every move, meeting, tweet, and executive order.

So here is the economic takeaway from this tip-toed political blog post: the more volatility, uncertainty, and controversy surrounding President Trump’s first 100 days in office, then the more likely we will see mortgage rates drop.  Markets disfavor uncertainty, and when it comes money flows to safer investments such as bonds and mortgages. On the other end, the more focused he becomes on pushing his domestic promises to cut taxes, deregulate industry, and increase infrastructure spending, then the more likely we will see mortgage rates rise. If you are in the market to purchase or refinance a home in the coming months, then the inescapable political headlines you encounter every day have more impact for you, as the Trump Effect on mortgage rates will surely be at play in the weeks to come.

Posted by: msundermier | November 10, 2016

Do The Big Brokerages Have Big Advantages?

Last month I posted about how RE/MAX, one of the world’s largest real estate franchises, is beginning to mimic our business model of offering one-stop-shop services with mortgage brokers and real estate agents all under the Re/Max umbrella. Imagine that!?! The little guys like me who offer combined, efficient, and effective services must be doing something right if the big guys are catching on.

How about other features of our services? Do the big brokerages still have other advantages due to volume and brand recognition? For example, some homeowners believe they’ll have a better shot at selling their home faster and for top dollar if they list with a big brokerage since they have huge advertising campaigns and a broader marketing reach. Is that true?

david-v-goliath

Do little guys like me even have a fighting chance in providing superior service and results compared to the Goliaths of our industry?

Let’s look at the stats, shall we! Since 2014, the median days on market for my listings was 9 days and the median sales price to list price percentage was 100%. This means that, on average, I sell your home in a little over a week and for the price for which you list. Additionally, I didn’t have a single canceled or withdrawn home listing. In other words, no one backed out of listing their home with me.

How do these figures compare to the big brokerages? By my account, Folsom’s three largest brokerages are Re/Max Gold, Keller Williams, and Coldwell Banker, accounting for a combined 240+ active agents and 2000+ listings over the last 3 years. Here’s how their figures compare to mine on  closed listings from 1/1/2014 thru 11/4/2016 (from Metrolist):

Brokerage Days on Market Sales Price to List Price Percentage Expired or Withdrawn Listings (as %)
Matt Sundermier 9 100% 0%
Re/Max Gold – Folsom 13 99.49% 24.9%
Keller Williams -Folsom 13 100% 22.9%
Coldwell Banker – Folsom 16 99.73% 20.5%

As you can see, there is not much difference on how fast and for how much we are selling our listings. Big brokers are not performing any better than me in these regards. And check out the far-right column, which represents the percentage of listings that expire or are withdrawn from MLS. At the big brokerages, 20-25% of listings don’t even end up closing escrow. Say what?!? Imagine meeting with an agent in preparations to sell your home and they say, “I have a 75-80% chance to sell your home.” Doesn’t exactly instill confidence, right?!

As a reminder, these numbers represent the total population of agents within these offices, so surely there are agents who have a better track record than that. Frankly, the individual agent makes a bigger impact on your listing and selling experience than the broker and brand they represent. But the big take home lesson is this: the big-brokerage advantage is a myth.

In order to effectively sell your home, you don’t need a brokerage with nation-wide TV commercials and a household brand name. You need an agent that has three primary traits: market knowledge, industry experience, and the ability to articulate both of those to you throughout the home selling process.

The next time you’re in the market to sell your home, don’t limit yourself to just the big-brokerages. As these stats and my track record suggest, there is no distinct advantage to you for going big. In fact, I’d make a VERY strong case it’s probably better you go small!

What other features of mortgage and real estate services that vary from big to small operations may be of interest to you? Let me know and I’d be happy to consider discussing your topic on an upcoming blog post. Until then, thanks as always for reading Matts Memos!

Posted by: msundermier | October 27, 2016

RE/MAX is copying me, and I’m flattered!

I am very excited to pass along a big announcement from a competitor. Why?!? Let me explain.

Earlier this week, RE/MAX, the world’s biggest real estate franchise, stated they are opening mortgage brokerage operations within their existing real estate offices for a “one-stop-shop” experience. Known as Motto Mortgage, these outfits will perform as mortgage brokers offering multiple finance options from a number of lending sources (just like we do!).

Some may say this is bad for my business. The world’s largest brand name is copying my one-stop-shop business model. Should I be concerned about my market share?

Perhaps, but the overwhelming feeling I have is one of flattery. I’m absolutely flattered that RE/MAX, a 43-year old company that has over 100,000 real estate agents doing business in over 100 countries, is trying to emulate us! And I’m flattered that a company with that much financial backing chose to set up their mortgage operations as a traditional brokerage rather than a bank, citing that mortgage brokers “bring choice and service to the consumer.”

The Blue Waters Group has believed from our very beginnings that the customer benefits from competent and compassionate advisors who can offer both mortgage and real estate services. With RE/MAX acknowledging the consumer demand for one-stop-shopping, no longer is our business model the obscure alternative; it is the one that leading industry players are striving for. No longer is our platform one that I need to defend with blog posts titled Is What I Do Legal; it is the one that’s copied by others.

We are still unique from RE/MAX’s aspirations in that our associates are able to offer both mortgage and real estate services (all of us are licensed both as mortgage loan originators and real estate agents) while RE/MAX simply hopes to pair mortgage and real estate services more efficiently by providing them under the same corporate umbrella. Nevertheless, this week’s move by RE/MAX further validates the craft I’ve been honing for nearly my entire career. Working as both a mortgage broker and REALTOR is not an easy task, but with a 15-year head start on RE/MAX and others who are sure to follow suit, I’m confident The Blue Waters Group will continue to be imitated but never duplicated!

Posted by: msundermier | June 24, 2016

REFI ALERT! Rates in a free fall after UK Vote to leave EU

The United Kingdom voted yesterday to separate itself from the European Union, an unprecedented action that has financial markets panicking all over the world.

Here at home, stock markets and mortgage rates are both falling.  I’m seeing 30-year fixed rates in the mid 3s, and 15-year rates well below 3%. 

Many are stating the UK’s vote is the single biggest step against a united Europe since World War II.  While I think that’s a bit of an exaggeration, the markets are uncertain on how this change will impact our financial markets now and in the future.  This uncertainty and volatility will push rates down, but how far and for how long?  No one knows.

If refinancing has been on your mind, don’t delay in reaching out to me so I can provide you some options.  Something worth considering is a cash-out refinance.  Many of my clients have been doing cash-out refinances to consolidate high-interest debt or pay for home improvements.

Posted by: msundermier | May 27, 2016

Should You Finance Energy Efficient Upgrades?

Energy efficient upgrades to a home can add value, lower your utility bills, and make you a “greener” citizen of the Earth. There are now a number of finance alternatives that have made these updates more accessible than ever before.

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For example, you can lease solar systems and offset the monthly lease payment with the energy savings produced. You can also borrow money to install energy saving appliances, and have the loan payments added to your property tax bill. With all of these new finance alternatives, it has helped many homeowners who otherwise wouldn’t have been able to install these updates with their own savings.

But are these new finance options truly helping homeowners? We have spoken to a number of clients who weren’t aware of some of the fine print of these finance schemes, specifically how these lease and loan options create a lien on their property that make it difficult or even impossible to refinance their homes.

A trusted colleague told me early in my career that there is no free lunch in lending. In other words, you don’t get to borrow money without strings attached. Typically, that means you are paying interest, and in the case of real estate it also means you put your property up for security against the loan. Mortgages, for example, are recorded against the property and this loan must be paid off prior to selling or allowing another mortgage to be taken out.

Most folks recognize that they are going to pay interest if they borrow money from a solar or utility company, but what does not appear to be commonly understood is that these loans and leases are recorded against the property.

Several times in the last year, we have worked to help a client refinance to a lower interest rate and save money on their mortgage payment. During the underwriting process, we discover an additional lien resulting from a solar, window, HVAC, or other energy efficiency update. This secondary lien must either be paid off or give permission for the mortgage to be refinanced. Many times, the client either doesn’t want to or can’t pay off the loan, and the energy efficiency loan won’t allow the refinance to proceed. The refinance attempt ultimately fails. Ironically, the act to save money through energy efficient updates ends up handcuffing the client to a higher mortgage interest rate loan, thus losing more money to interest than what is being saved in lower utility costs.

Not all loan and lease terms are the same amongst the various options and vendors. And in some cases it probably makes sense to obtain one of these loans and live with the potential down sides.   Simply be sure you know the fine print. Solar and other outfits are pushing these available financing options hard on homeowners, but there are more traditional finance options available that you may want to consider as well. A cash-out refinance, home equity line of credit, home improvement loan, or other form of traditional mortgage financing may make sense as well. As always, we are happy to discuss what options you may have and objectively point out the pros and cons of each.

Posted by: msundermier | April 12, 2016

Myriad of Mortgage Options

When I began this blog in 2009, I vowed to not devote it to monologues about underwriting rules or my latest listings for sale. BORING!!!  Consequently, when I take the time to write one such as this, one with a topic that goes against the grain of the very spirit of MattsMemos.com, then I must be doing it for a darn good reason.

Indeed, the reason and timing of this post are quite significant. For the first time in a decade, the mortgage industry is expanding its options to consumers, and with it will come a healthier real estate market. This pendulum swing is long overdue, and it makes working with a mortgage broker like us an even smarter decision than ever before. How? Let me explain.

Myriad of Mortgages

Back in 2007, nearly 75% of mortgages were originated by mortgage banks (think Wells Fargo, Bank of America, etc.). For many years, the mortgage market was very homogenous; varied loan options just simply didn’t exist. Last year, the banker’s market share was less than 50%; industry analysts have been calling it an exodus of large banks. Why? The reasons are many, but a significant one is banks don’t have the wide array of options that the mortgage marketplace now offers, so consumers find brokers a better option.

There are more options to offer consumers nowadays, and brokers like us are simply better at providing the options of today’s market. Let me give you a brief overview of some of the more significant finance options that we can offer our clients that you may not find at your traditional bank.

Reverse Mortgages – These are gaining tremendous popularity for homeowners over 62 years old, and we offer them! In short, you no longer make a mortgage payment ever again by using the equity in your home to cover the payments. While these loans were traditionally designed for seniors on a low, fixed- income and high equity trapped in their home, they are being utilized by high net-worth baby boomers who are approaching retirement. They can be used as a diversified financial tool by giving retirees the option to withdraw equity from their home (which is not taxed) rather than assets from their retirement accounts (which typically is a taxable event), or as a way to continue their lifestyle while simultaneously living mortgage-payment free.

Home Remodeling Loans – FHA and Fannie Mae have fixed rate loans that allow homeowners to significantly remodel their homes, using the post-renovation value of their home to access borrowed money. These are being used to build an addition, put in a pool, or redo a kitchen. In prior years, the only way to get a mortgage for a remodel was to already have the equity in the home prior to the improvements. These programs allow you to leverage the future value of the home, thus making it easier to borrow for that needed home makeover.

“Piggyback” Loans – They went by many names in the 2000s; “80/10/10,” “Simo Seconds” & “Piggyback Financing.” It was a method used to split up the total amount borrowed into two mortgages, possibly to avoid paying PMI or to borrow more than the maximum allowed on a single loan. We have a bank who is offering these up to 90% loan-to-value; I don’t know of any traditional banks offering such a program.

Jumbo Loans – These are big loans; amounts over $475,000 in the Sacramento area. We have a number of lenders offering competitive fixed rates nearly as low as regular sized loans!

Alternative Documentation Loans – Many people have been squeezed out of getting a new mortgage because it is difficult to fully document their income (think business owners). New lenders are allowing these types of borrowers to submit bank statements or profit & loss statements to document their income; a very sound alternative that went away after the Mortgage Meltdown.

The bottom line is this: creative financing alternatives are back and no one is better at offering and executing these options than a mortgage broker. While we will continue to be a price leader for the more “vanilla” loans, these other options simply expand our loan “tool box” in order to help as many of our clients in the community as possible.

 

Posted by: msundermier | February 18, 2016

2016 Real Estate Market Forecast

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Last week marked the beginning of Chinese New Year, the year of the Monkey. Fitting, considering last week’s financial markets around the globe were filled with “monkey business.” It seems everywhere you turn lately there are crazy things happening. The Dow Jones is down several thousand points from recent highs, suggesting we may be entering a “bear” market. Gas prices are as low as they’ve been in nearly 15 years, leading many to think economic growth is slowing. And several central banks around the world are charging negative interest rates (imagine being charged interest to keep your money in the bank!?!).

Despite the monkey business everywhere else, our local real estate market appears to be quite normal. We are seeing similar vital statistics this winter compared to recent years. Sacramento area home prices are up 10.7% over the last year. And low interest rates combined with rising rent prices are keeping demand high for real estate.

But will the world’s monkey business eventually seep into our local markets? Will we remain insulated from the worlds’ woes? Or be dragged down with them?

Bear and Monkey

Will a Bear Market join forces with the Year of the Monkey to sour the local market?

In short, I believe the recent economic turmoil will only fuel our real estate market, not hinder it. We should see the similar dynamics seen in recent years (low inventory, high demand, low interest rates) but I think they’ll be further intensified in 2016! Here are my reasons for a strong year ahead for Sacramento real estate:

 

Money will flow to what’s “real”
With money fleeing the stock market, it has to go somewhere. Fear is abundant in the markets (check out this cool “Fear & Greed” index tool), and money runs to safety when it smells fear. I believe it will find its way to real assets, like precious metals (gold prices are up 10% in just the last month!) and real estate.

Millennials will “get real”
It is widely documented that the millennial generation (those born roughly between the early 1980s and early 2000s) has deferred home ownership more than their predecessors. The reasons vary (they have more school debt, prefer to live in higher-priced urban areas, don’t want to be “tied down” with a mortgage, etc.) but sooner or later they’ll see the light to become homeowners. In Sacramento, the validity for homeownership is becoming quite clear.

Millenials
In recent years, Sacramento has become a magnet for Millennials. This article cites everything from the dining scene to recreation to coffee as reasons why younger folks flock to the River City (excuse the language used in the article). Furthermore, rent prices have been skyrocketing in Sacramento. This article from Sacramento News & Review states we are the third hottest rental market in the country, only behind Portland and San Francisco, with average rent prices climbing 10.6% in a single year. With rents rising and no clear sign of significant new construction on the way (more on this in a moment), many who are renting should be considering home ownership, which will further spur real estate demand and prices upward.

New home construction will continue to lag
New home and apartment construction has not kept up with demand in Sacramento. Developers site high costs and red tape; others are concerned of the over-building that occurred a decade ago and don’t want to repeat history. Nevertheless, only Detroit had fewer new construction starts last year than Sacramento.
Let that last sentence sink in for a minute; the only city with slower new construction activity in the entire county is a city that lost 25% of its population from 2000-2010. Detroit is not building because they don’t need new housing units; 1 in 4 people up and left during the Great Recession! Sacramento, in contrast, GREW 25% in population during the same decade, and until we begin building new housing we will continue to see home prices and rents soar, both in urban and suburban areas.

Mortgages will remain cheap and accessible
With gas below $2 a gallon and other world banks charging negative interest rates, its clear that no one should be concerned with inflation here in the US. Inflation is Public Enemy #1 to fixed interest rates such as mortgages, so with no inflationary threat mortgage rates will remain low.
How low? In a word…ridonkulously low (well, in sort-of a word)! With low rates (30-year fixed rates below 4% and 15-year rates near 3%) and, in turn, low mortgage payments, this will only further instigate millennials and other home renters to become home owners. Furthermore, underwriting guidelines are loosening and new loan products are emerging (more on this next month in a separate post). This makes financing accessible to more home buyers, thus allowing demand to grow ever more.

Rose Colored Glasses

For the second year in a row, my forecast is looking up!

To re-cap, I’m incredibly optimistic for the 2016 real estate market.  Compared to my “rosy” forecast from 2015 (which turned out to be quite accurate, I might add), this year’s is just plain flushed! I expect strong price appreciation (10%+ for Sacramento), coupled with high volume (lots of buying and selling), and fueled by very affordable and available financing. Until new home construction is firing on all cylinders and inflation becomes a concern, the outlook for our local real estate market will remain bright.

As always, thanks for reading Matts Memos!

Posted by: msundermier | February 4, 2016

Timing The Market is Like Timing The Weather

I just returned from a trip to Switzerland with my wife and oldest daughter. The weather was incredible, despite the fact January is typically the coldest and wettest month for the Swiss.  Our good fortune was quite remarkable and I can’t help but compare our timing with the weather to how many folks feel about timing the real estate market.

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The majestic Matterhorn is rarely seen this clearly during winter.  We were very lucky!

 

More and more clients seem to be asking for my prediction on what the upcoming year holds for real estate. The truth is I can’t time the market any more than I can time the weather!

Instead of basing decisions on good fortune from things beyond our control, I’m an advocate for planning and acting based on things we can control. This is true in most walks of life, including real estate. Below are the 3 things I encourage every client to consider before making an important real estate decision.

 

Plan Ahead

Most people don’t wake up and decide they’re going off to the airport to go on vacation because the weather looks good in a faraway city. Rather, a long trip requires planning. How are you going to get there?  What will you do when you get there?

Planning for this trip began in October. We figured out which cities we would visit, how we were going to get to each one, and where we would stay.  Furthermore, we have a “team” of people that we need to consult with prior to traveling (colleagues, grandparents, teachers, etc.), and each one’s input is important in figuring out if and how the trip will come together.

The same is true in real estate. You should not wake up one morning and decide to buy or sell a home on a whim or, even worse, because of what some market “expert” is predicting.  It takes planning, and a team of people to help you sort it out.  Many people take this time of year to do real estate planning so they are ready to act in the spring when market activity picks up.

 

Focus on Factors You Can Control

Mary and I knew January was a sketchy month to travel to Switzerland. February or March would have been better as the temperatures are generally warmer and there likely is a bigger snow pack to enjoy for skiing.  In the end, January was the month where we could pull it off due to our schedule.  In the end, it worked out great because we had Spring-time conditions in the dead of winter!

With real estate, I see many people attempt to decide to buy, sell or refinance based on the right timing in the market. I believe this is a recipe for disappointment.  The market is unpredictable and there is no way to guarantee the market is going to behave in your favor.  Rather, an important real estate decision should be based on questions you can answer: does your family need a larger home?  Are you stable in your career?  Can you afford a home?  Is your health making it difficult to maintain your home?  Do current rates make your monthly payment affordable?

Making a move based on these factors means you are doing what’s best for your timing, not the market’s.

 

Don’t Let The Outcome Be Determined By Factors You CANNOT Control

As much as we enjoyed our fortunate weather, our enjoyment was not going to be impacted by Mother Nature. We packed for cold weather, and had alternative itineraries for gloomy days should they have arisen.  Also, this was a rare opportunity for Mary and I to travel with just our oldest daughter (we have two younger children as well).  This factor alone meant we were going to have a memorable and unique trip to spend quality time with her, regardless of the weather.

When it comes to buying and selling real estate, it is a dangerous proposition to say that your decision will only be a smart one if the market ends up working in your favor. For example, if you are considering selling your home this spring because you are confident home prices are going to fall later this year, then how will you feel if prices keep going up?  Conversely, if you are thinking of buying this year because you’re convinced you’ll be priced out of the market if you keep waiting, then how deflated will you become if prices and/or interest rates fall instead?

The bottom line is this: you and I can’t time the real estate market any better than we can predict the weather. I encourage all of my clients to put less emphasis on what’s going on in the market, and a greater emphasis on what’s going on in YOUR life.  In other words, is buying or selling a right time for YOU?

 

As I said previously, now is a wise time to begin discussing and making plans for a real estate decision later this year. These types of life-changing events don’t formulate over-night. My team and I are here to help you sort out the important and complex decisions ahead.  As always, we value your trust in us to navigate you in your real estate affairs.

Posted by: msundermier | October 23, 2015

Are Californians Crazy?

Jimmy Buffett sarcastically claims in his iconic song “Fruitcakes”, California has it all.  “They’ve got riots, fires and mudslides…” so goes the tune.  Fruitcakes

In addition to these struggles, we also have an extremely high cost of living. Historically, behind only Hawaii, California has the highest median home sales price of any state in the country.  While the median home value in the U.S. is approximately $180,000, the Golden State’s median home price in August was nearly three times that at just under $500,000.  Non-Californians think we’re crazy to spend that much money on a pile of bricks.  Are we?

I guess the answer depends on who you ask.  If you ask me, I seriously believe California does have it all!  I am thankful my roots are deeply planted here, and that my career entails being both an advisor and ambassador for California home ownership.  Nowhere else in the country do you have as many diverse recreational, cultural & culinary experiences just a short drive away than right here in California.

Photo courtesy of my super hot (& photographically talented) first-mate, Mary.

Photo courtesy of my gorgeous (& photographically talented) first-mate, Mary.

I have not left California in over 18 months.  Given my family’s track record of travel, that’s a bit of an anomaly.  But, during this time, I’ve had a wider array of vacations than in any other point in my life.  In just the last year, we have taken road trips to:

Redwood National Forest – Hiking, beach combing, zip lining
South Lake Tahoe – Skiing, snowball fights
Lake Oroville – Tubing, wakeboarding, fishing
Southern California – Disneyland, Malibu beaches
San Francisco – Beach Blanket Babylon, Live Music in Botanical Gardens, sailing
Central Coast – Rugged beauty, abundant wildlife (I saw a Blue Whale!), sea kayaking

California Collage

California has it all!!!

When I put together this picture collage, it was such a wonderful reminder of the diversity of our state.  Does California have its fair share of problems?  Certainly!  “Riots, fires, and mudslides” are probably just the beginning.  But having opportunities to make wonderful memories is not one of them.

Some may consider Californians to be “fruitcakes.”  But, when you learn that CA homes have appreciated more than 50% over the last four years (its true!), perhaps it’s the ones that don’t believe in California homeownership who may be the ones out of their minds.

Stay crazy, Californians!

Over the last 5 years, there has been a growing trend of mortgage professionals electing to work for mortgage companies who operate as banks rather than brokers.  In fact, to my knowledge, my firm is one of the only new brokerages to emerge in our community since the mortgage meltdown in 2008. Did my decision to start a business on the minority model doom me from the start?  Or is our against-the-tide approach in the lending industry exactly what clients want amongst a crowded selection of impersonal, mega-corporate banks?

All sensationalism aside, the difference between a banker and a broker is simple: bankers lend their own money and brokers do not. However, a growing number of “direct mortgage lenders” actually don’t have their own money either, but rather a line of credit from a larger funding source who ultimately buys the loan from them only days after the loan closes. So they’re essentially still more a broker, like myself, than an actual bank.  A common misconception is if you go straight to the company who has the cash to lend then you can get a better deal. This is simply not true. Pile of Money

So who offers better rates?  Brokers, like myself, tend to work with “wholesale” banks that don’t sell directly to the consumer.  As a result, their only marketing expenses are compensating the brokers that deliver them business.  “Retail” banks, on the other hand, spend gobs of money advertising and having access to the consumer directly.  While they don’t pay brokers in order to acquire business, they have tremendous other overhead expenses for which to account. I often wonder how much it costs the country’s 4 largest banks to operate their 20,000 retail branch offices! The rates we offer at Blue Waters are very competitive, and most cases lower, when you compare them to other mortgage outfits.  Case in point, I recently received a referral from a VP of a large bank to help his brother refinance.  I asked him why he would refer it to me instead of the company who signs his paycheck.  He said, “your rates are way better than ours.  I’m looking out for my little bro.”

And who offers better loan program options? One often assumes that if a bank lends their own money, they get to make their own underwriting rules.  While this is true in very few instances with jumbo and sub-prime loans, the more common reality is banks and brokers alike are ultimately originating loans that are sold to investors (ie-Fannie Mae, Freddie Mac, FHA, etc.).  As such, we are all following the same guideline rules when working to get your loan approved.  Furthermore, a bank has their single menu of loan rates and options.  A broker has a multitude of different banks they do business with, so my array of options is unparalleled when comparing to a traditional bank.

The rates and programs of brokers and bankers are certainly characteristics a consumer should consider, but in the end it’s the service level that matters most in your mortgage professional.  I can’t universally say brokers have better service than banks, but I can say this: I am completely dependent on my client’s satisfaction of and trust in my company in order to stay in business.  I’m not so sure a multi-national, diversified, conglomerate, too-big-to-fail bank has the same mentality.  To me, service is more than simply doing what the client asks; it’s about educating and empowering clients to help them make sound financial decisions for themselves.

Trust Diagram

In our firm, building trust is not done with a formulated diagram. It simply comes down to just doing the right thing for our clients. Every. Single. Time

In many regards, my work is similar to that of a teacher.  It is no coincidence that I recently had the opportunity to spend a Spring Semester as an adjunct professor at Folsom Lake College teaching Real Estate Principles. Doing so was a fantastic opportunity to give back to my small community, and also a reinforcement of my desire to teach students and clients alike.

So when choosing your financial professionals I hope that you will keep Dave Ramsey’s (America’s most well-recognized and respected finance commentator) advice in mind, “when getting help with money, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

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