https://www.youtube.com/watch?v=nFYp9SiBKw0
Introduction: Today, we're going to discuss how a lender can potentially harm your financial interests and how you can safeguard yourself from such situations. I'm not referring to emotional harm; I'm talking about financial damage, which I've observed quite frequently recently.
Understanding the Background: To fully comprehend the current situation, let's take a brief look at the past. In 2020 and 2021, there was a surge in refinancing, with new lenders entering the market daily. It was a time when getting business was remarkably easy. However, 2022 and 2023 have brought a different reality. Refinances are less common, and the industry has become more competitive. Many real estate agents and lenders have left the industry because they couldn't adapt.
Impact on Buyers: So, how does this affect you as a buyer? One of the most prevalent issues I've noticed is that buyers are promised certain interest rates but don't receive them. Lenders often use loopholes to shift the blame onto the buyer.
Taking Control: Let's delve into some strategies to protect yourself:
Why These Steps Matter: The mortgage market in 2023 is highly volatile, and rates can change rapidly. Some lenders may gamble with your money, hoping rates will decrease before your closing date. If rates increase, you could end up paying significantly more.
Conclusion: In conclusion, protecting yourself from unscrupulous lending practices requires vigilance and verification. Whether you're working with an ethical lender or not, follow these steps to ensure you get the rate you deserve and avoid financial harm. Remember, verify, then trust.
Today, we're going to talk about how a lender can really screw you over and how you can protect yourself from this. So, I'm not talking about emotional damage; can Elantra do that? Oh yeah, I'm talking about financial damage and what I'm seeing the most of right now.
Okay, so before we start, you need a little history lesson. In 2020 and 2021, there were so many refinances, there were lenders new lenders every single day. It was so easy to get business; it was insane. But in 2022 and 2023, it's a different story. No refinances, so everyone who would come in for Easy Money suddenly can't get any deals. We're at the point in this cycle where a lot of people have already left the industry - a lot of real estate agents and lenders - because they can't survive. So, we've got the last few thousand, you know, who should be leaving soon clinging on.
Okay, okay, well how does that affect you? What I'm seeing a lot of is I'm seeing buyers being promised interest rates and not getting them. I'm seeing lenders use loopholes to make it so the buyer thinks it's their fault.
So, let's talk about this. First of all, you know pre-approval letters, is that the interest rate you're going to get? No. Generally, a lender is locking you when you're in contract. If you're talking to most lenders around the country, they're going to be saying once you're in contract, that's when we'll look at locking.
Now, this is where the trick lies. So let's say you're talking to - and I'm going to give you guys a real example - so I had a buyer, and she was working with another lender as well, and she had worked with this lender before, and he had promised her that she would work with him on the next transaction. But she finds rates might be a little high, so she reached out to me, and I said, "Okay, this is exactly what we can do. Rates were low at the time, so it was like, and it was a VA loan, it was like 5.99% with no points." He was much higher than that, but he said, "I really want to work with you again. I will match Jennifer's offer."
She goes, "Great, you're going to match Jennifer's offer? That's great." Yeah, one week before closing, he says, "Hey, we really need to lock now." What? Wait a second. She already went through that. She's like, "Jen," and she was in contract, guys, she was in contract. The lender had said he would match my offer, but he never locked her. Now, why would a lender do that? Because you're like, "Well, if they're going to match, why wouldn't they lock? This is so stupid." Probably because they were gambling.
So the game works like this: they tell you guys a really great rate so that you'll go with them. Then they're gambling that the market's gonna go down so that they can lock and act out on that rate that they've offered. Because rates in 2023 have been like a teeter-totter, right? Up, down, up, down. They're hoping that rates will come down while you're in contract to a level that they can lock you at what they told you they locked you at. Now, in this case, rates had gone up quite a bit, so now to get that same rate, fifteen thousand dollars more.
Fifteen grand! And look, this buyer, she's a sweetheart, she's like the nicest woman in the world. She only went with him because she has, you know, she promised him, and she has a code of ethics, a code of honor. Does she deserve to be paying 15K more? No. Could I match the rate that I had offered three weeks earlier? No, the market had changed.
Now, here's the thing. You're like, "Oh my God, how can I not have that happen to me?" You need proof of lock, it's that simple.
So when we lock a loan, so let's say that you get, you go into contract, and you're working with me, and you're like, "Jen," and we talk about it, we're like, "Here we are with rates. Do you want to lock? Do you not want to lock?" And we will walk through what renegotiating is, what the ability, all that fun stuff. And you say, "Jen, I want you to lock." Cool. We lock your loan. Then when you get your loan estimate, which you should get within three days of application, there is a box on that loan estimate that says, "Is your rate locked? No or Yes." If you think your rate is locked and that box says "No," you are working with a gambler who's gambling with your money. And if they go, "Oh, like, okay, well, when could it be that you would have a loan disclosure that doesn't say you're locked but you're locked?" So, like, if, for instance, day three, I have loan disclosures go out, you tell me to lock on day five, well, yeah, the loan disclosures went out before you locked, so of course, they're not going to reflect the lock. However, when I lock your rate, you're going to get some verification that that rate has been locked.
You guys should not be shy about asking this. I don't care who your lender is, you need to say, "Hey, like, when am I going to get a locked loan estimate? If your rate's locked, if you're locking later in the transaction, say when am I going to get the confirmation of the lock? And if they say, "Well, we don't give one," say, "I need one. You need to get someone from your company to figure out how to get me a lock confirmation because I am not comfortable."
Because it's not just this gal that I've seen this on, you know? I've seen it where the lender has told someone, "Oh yeah, the rate's six percent, six and a quarter percent," they get to a week before closing, and you're like, "Why are they doing it then?" Well, because in order to close on time, they've got to lock you about a week before closing. So they've basically been taking day one to gamble with your money without you realizing what's going on. And then you get the news, "Oh, that six and a quarter? Yeah, we couldn't get that. Rates have really gone up. You're at 6.75%." And you're going, "Wait, what? I thought I was locked." And they were, "Oh no, you never told us to lock."
Okay, so here's my advice to you guys. Number one, work with an ethical lender. But okay, let's get away from that. Let's say you're already working with this lender, what do you do? So, A, if you like a rate, you're going to talk to them about rates day one that you're in contract. If someone says, "Oh, we lock after the appraisal," why are you working with them? Please, dump them. Like, any lender can lock day one. If they're trying to wait until further in the transaction, it's because they're trying to trap you.
Like, would I say to a buyer, "Hey, yeah, let's lock a couple of weeks." No, you know why? I don't want the instability. Like, they need to know what their payment is, and they need to be comfortable. The only way I can give them that information is with an actual locked rate. This market is too volatile. You know, I could quote six and a half on a Monday and be at 6.75 on Tuesday. That is what's going on in this market. So, you need to talk to your lender when you're in contract day one, what are rates, what are my abilities to lock? If they say they won't lock you for a couple of weeks, you're ditching them. Call me.
So if they say, "Yeah, we can lock today," let's say that you go, "Okay, that sounds great, let's lock." Great, cool. When you get your loan estimate, you need to verify that it says you're locked. I would even go as far, and look, I do this even though I know the lenders I'm working with, just because I like a paper trail. Okay, and do I think they're trying to screw me over? No. But if they forgot or something, I want to make sure they know they better honor what we talked about on the phone.
So, I would say, you know, let's say it's Bob, "Hey, Bob, it was great talking to you today. As discussed, I would like to lock XYZ with zero points and with a lender fee of XYZ." Now, if you don't know those numbers, you should. You hired this person to work for you; how do you not know what you're paying them? You need to ask; people are so shy about this.
Look, if you're working with me, Guaranteed Rate, VA loans, we waive our fee. If you're not a VA loan, our fee is $1,440, okay? One thousand four hundred forty dollars; that is my lender fee.
If I'm charging you discount points, and I have videos on discount points, I will tell you right. So you would say, "Hey, Jennifer, I want to lock at these numbers," are based on nothing, guys, "six and a half with no discount points and your lender fee of $1,440." Okay, and you may go, "God, Jen, aren't you gonna think I'm annoying?" No, I'll read that; I'll be like, "Sweet, cool."
I mean, I would have already done it, but I don't get offended by people double-making sure everything's right. I think it's smart; I support it. And also, if the lender, let's say you have some BS lender that's gambling with your money, if you put that in writing and you email that to them, and they try to screw you at the end, you can go up the management chain. If a manager, you know I'm a manager, if I had an employee that they got something from the client telling them to lock, and it was based on a discussion, and then I hear the, "Oh, we'll read through," I would fire them. I would fire them.
Now, look, are most companies gonna fire loan officers? Not right now, if they're good at getting deals in, but they would honor that. Most companies will honor that. Now, you can't just make up stuff; you can't be like, "I know someone's going to try this, they're gonna be like, 'Hey, Jennifer, as discussed, I want 4.22% with an $80,000 lender credit,' as discussed. And I mean, I would respond real quick to that and be like, "Hahaha, we never discussed that, nice try. This is what we discussed, right?" But there would at least be a dialogue. Please don't just prank me, guys. I have so much to do, but look, the point is you want to verify. Okay, you're gonna make sure when you guys get the loan estimate that if you think you're locked, you are.
There's a box; it's so easy, "No or Yes." You're not going to trust anyone, don't even trust me. Like, look, I'm gonna do what I say, but you need to not trust everyone, you need to verify, then trust. Verify, then trust. If a lender is saying that it's better to lock towards the end of the transaction because rates are going to go down, uh, they're full of it. It's that simple. It's like if you guys watch this stuff close enough, you'll see that even the experts, the people who get paid millions of dollars to watch this stuff are like, you know, it should do this but it's been doing this, so I mean, it's bad.
So, really, really watch out for that. Um, this is where I'm seeing the most predatory behavior. So, make sure your lender locks you if you see a rate you like. Make sure it's locked. Make sure you're talking to rates about your lender. Do not wait for them to lead this conversation; you are the client, this is your money, you need to make them accountable. And then you need to verify that what you expect is what you're getting. I don't want you guys being victimized at the end. I don't want people taking money from you; you know, this needs to stop in our industry. So, thanks for watching. I hope it was helpful. As always, I'm licensed in 48 states to do mortgages. My team and I would love to help. We do not gamble with your money; we are here to get you to the Finish Line with as little stress as possible. Thanks for watching.