The Loan Officer Went Out of His Way, and Still Didn’t Get Our Business

by Kevin on October 1, 2008

This week I am writing about the process of us buying our first home. We bought our home one year ago in September of 2007. I hope you will find some gems that help you in your next home purchase. Last week I told you to come up with a home buying checklist before you start the process. Today, I’ll tell you about our pre-approval process.

We had run the numbers. We figured out exactly how much house we could afford, what we expected utilities, homeowners insurance, and property taxes would cost. We had already looked online at several houses, but we knew we really couldn’t do much serious looking until we were pre-approved for a mortgage.

I mentioned in the previous two posts that we bought the house in September of last year. Actually, we closed in September, but signed the contract in the middle of the summer (I think in July). We bought a new home that was under construction, thus the delay in actually closing on the house.

Deal with Lender Directly

I wanted to deal directly with the lender rather than going through a mortgage broker. I had read several articles online touting the benefits of avoiding a broker, primarily lower costs (fewer middlemen). There were several large, stable banks in our area so I started asking around for referrals from friends and co-workers.

I ended up calling our brick-and-mortar bank, and two referrals.

We had our bank statements, income justification, 401k statements… everything financial showing that we were paying our bills on time, had good credit, and had money in the bank for a down payment. This helped us tremendously because it shows the bank that you are serious. Everyone is happy when the buyer comes to the table prepared.

The brick-and-mortar loan officer

We arranged a meeting with this loan officer. He even offered to come out to our area near my work (instead of meeting downtown). We met at a Starbucks and went over our options. We were interested in the programs available to first time home buyers that I had researched online. Some of them would give you free money for your down payment if you agreed to stay in the house X number of years. That seemed very interesting… who doesn’t want free money?

He was a nice enough guy, and we certainly were impressed that he came out to meet with us. It was a beautiful summer day and we sat outside and had a nice conversation.

Referral Loan Officer #1

I called this lady and she pointed me to the bank’s website, asking me to fill out some of my information online. I filled it out, and got a call back a few days later saying they could approve us for an amount that was in the range we were looking for. Actually, it was more than our range.

That was the last I heard from her.

Referral Loan Officer #2

It turns out this was the builder’s preferred lender, but he was also a referral from two people in my office. He had done their mortgages and had done a fantastic job.

The kicker was the builder we ended up buying our house from would kick in an extra $1,000 toward upgrades or closing costs if we used this lender. That sounds good in the short run, but if the long run costs are higher that wouldn’t work. We remained cautious and really wanted to do our due diligence to make sure we got the best deal.

I called him, left a message, and he returned the message by the end of the day. He took my information and got us the pre-approval letter. I got several e-mails with updates through the process, and once we had the approval he e-mailed that over to me as well (to take to whomever we were trying to buy a house from).

And the winner is…

We ended up choosing Referral Loan Officer #2 for a few different reasons.

For starters, Referral Loan Officer #1 never called back after she told me we were pre-approved. Struck her off the list.

The brick-and-mortar loan officer, after the initial meeting, was lackluster. He was very, very slow to return phone calls and never seemed to be in the office. He also quickly shot down our idea of using the first home buyer programs to get free money without an explanation as to why. He went out of his way once, but after that it was very hard to get in touch with him. We were not impressed at all and struck him from the list.

The left Referral Loan Officer #2. Not only was he the preferred lender for the builder we ended up using, but he was friendly… courteous… and eager. He wanted our business. Scratch that. He earned our business. And the costs ended up being right in line with what we wanted to pay.

He was responsive, and answered a bunch of our questions. He explained why the first time home buyer programs we were looking at would end up having higher costs in the long run. He also mentioned it was harder to get approved for the programs. So he still shot that idea down, but he gave us an explanation as to why.

Even though the first loan officer came out to meet us and went out of his way, we still went with the referral officer. You can’t just be impressive up front, but throughout the entire process.

Preapproval in Hand

Now that we had three different pre-approvals for amounts all north of our price range, we could go house shopping. We thought about doing the whole buy the house on your own thing, without a realtor, but I’ll admit that made me nervous.

It was time to find a realtor. I’ll tell you that story tomorrow.

{ 4 comments }

Kapil M October 1, 2008 at 12:02 pm

Kevin ,

Congratulations on your excellent blog.
I am following your blog about the house purchase. I like the story telling format of your experience. This not only makes it sound personal but also gives you an idea of both – 1> the process that every prospective home owner will go through AND 2> the extra experiences that some of might have to go through ( like the other 2 loan officers)

I live in a rented apartment and your series may give me some helpful insights.

Kapil

Christina October 1, 2008 at 2:39 pm

When my husband and I were shopping to build a new home, we visited two places that specialize in modular homes. One treated it like they were trying to sell us a car (“What can I do to get you in one of these homes?” and the other one treated us like we were kids who didn’t know what we were doing, and NEVER returned our phone calls. We ended up working with a contractor and stick-building our house… he was fabulous… and we’re thrilled with the house.

Makes me feel like I wish I could back to those modular dealers and have a “Pretty Woman” moment, where I show them my fabulous new house and tell them, “Big Mistake!” for not treating us better.

I think you guys are definitely on the right track and have done your homework!

Best wishes!

Miss Thrifty October 2, 2008 at 3:39 pm

Sigh! I’m actually quite jealous that you had loan people fighting for your custom.

Here in the UK our home loan renewal is up for renewal in a few months time, and despite having a blemish-free credit record we are having a terrible time trying to find a halfway decent deal. I wrote about it here:

http://www.miss-thrifty.co.uk/2008/09/25/telephone-conversation-with-my-mortgage-provider/

Kevin October 3, 2008 at 9:08 pm

@Kapil: I’m glad to read you’re enjoying the series. Thanks for stopping by and commenting.

@Christina: Just to clarify, this is our story from when we bought our home last year. Modular homes can be great (prefab “green” homes), but I know what you’re talking about with the big lots of homes… seems so shady.

@Miss Thrifty: I think that is more of a reaction of the credit crunch. I think it would hard for us to refinance here as well.

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