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Thursday, March 30, 2017

Do You Like to Shop?

My wife loves to shop. And she is very, very good at it. She knows where to shop to save 25 to 75 percent on just about everything we buy. With her help I have become a much better shopper myself. Don’t get me wrong; we don’t always go to the cheapest places. We are not “cheap” shoppers; we are value shoppers–there is a difference.
 
There are so many examples of making this distinction between cheapness and value. Let’s take dining out, for example. If I want to take my wife out to dinner for date night, I’m looking for a balance between ambiance, service, staff friendliness, quality food, and lastly, price. Price is important but it is not as important as enjoying a wonderful romantic evening with my wife. Paying more for our meals to ensure that she gets the other “intangibles” from the restaurant is very valuable to me. If I wanted cheap, I could take her to Sonic Burger, but I think you might all agree that that, surely, would not prove to be valuable.
 
To be a good shopper of clothes, groceries, entertainment, cars, furniture or anything else, you need to be an educated shopper. It’s no different with mortgages. Most people do not know how to properly shop for a mortgage because their contact with the industry is so limited. So, they ask the only question they know how to ask:  “What is your rate?” and “What are your fees?”  These are question to ask if you’re looking for something cheap, not valuable. And the concern I have with limiting your questions to just those two is that many unscrupulous loan “sales people” can manipulate their answers in a manner that may not be entirely to your benefit. This could end up being very unvaluable to you.
 
So, what questions should you ask?  What should you be looking for?  In my opinion, you should be looking for the right combination of rates, programs, fees, education, financial planning, service and trust. If you can get all these, you will have found true value.
 
In next month’s column, I will fully elaborate on each of these areas so that you can be fully educated the next time you need a mortgage. For now, I will give you some brief bullet points about these areas to whet you appetite.
 
  • Rates:  You can control/influence these – they are a function of the points you pay …or “don’t” pay.
  • Programs:  Be wary of  “salespeople” offering you programs before they fully listen to your needs. Find a consultant, not a salesperson.
  • Fees:  You must understand the five distinct categories of “funds to close” before you can shop.
  • Education:  If you fully comprehend the loan program choices you are being offered, you’ve probably found a good consultant. If not, you may just have another “salesperson.”
  • Financial Planning:  Does you mortgage just help you buy your house, or does it help you retire earlier and make you wealthier as part of a complete financial plan?
  • Service:  Is this just an industry buzzword, or could BAD service actually cost you THOUSANDS of dollars?
  • Trust:  How did you find your mortgage company?  Was it a “too good to be true” offer you received in the mail?  A billboard?  A radio ad?  Companies that advertise to the general public are in the business of selling, not necessarily advising. Or did someone refer you to a lender enthusiastically? We’ll talk about how to find a good lender next month.
 
 

Until then, keep on keepin’ on!

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