I am Bob Brooks and you are watching prudent money. You know, buying a house is one of the biggest commitments that you will make financially. Getting the financing correct is crucial. If you're working with a competent mortgage professional who is working with you from a consultants point of view, then you should be fine. The problem is that as with any business, you have those that are just out to make money. Oftentimes, they look like a consultant.

However, they're not out there for your best interest. So how do you know? Well, you have to know the tricks of the game. Today mortgage professional Mark Pfeiffer is here to tell us the sales tricks of the trade. Mark. Of course, in every business, there are people who have your best interests at heart, and then they're the ones who are out to make as much money as possible.

What are some signs of a true consultant versus a person who just wants to close the deal at any cost? No, I think the the true signs of a consultant is taking just just that as a consultative approach. It's making sure that they ask the right questions, explain different options and help guide anybody through the process so that they get the Correct mortgage, I think the real thing is just understand that there can't be absolutes. Not every program is going to be right for every person just truly are customized to each person's needs and desires. To talk about some of the misleading aggressive marketing, you know, the interest rate drives everything. One of the more popular marketing strategies is to claim that they give the lowest rate you might be getting the lower right however, you're paying for it somewhere else.

Mark, you coined a phrase fake rates. Talk about that for a moment. Well, sure. That's obviously a very technical term in the industry, no, but not fake rates. And just what I call those those headline rates, the ones you'll see either online or in the newspaper, even in the radio ads, where the rates You know, they're there to make the phone ring, but what what you have to understand is those rates may be different than what you're looking for, as a consumer, they may be for 30 year fixed rate with lots of money down and, you know, just different different options. So again, the fake rates you just need to know Stand.

They may not necessarily be what's what's obtainable for for you as an individual or, or even to some degree, bona fide in the current market. Because when you place an ad, it could have been from a week ago. And if the rates have changed since then it's no longer a, quote, real rate. Well, for that reason of fake rates, the good faith estimate is an important part of the process. Explain for our viewers exactly what a good faith estimate is and why it is important. Sure, a good faith estimate or known as a GFP.

Nowadays, it's also called a loan estimate. And le so the two terms can be synonymous, but it's really, it's a form that is standardized every lender has one has to look exactly the same as made by the government. And it gives you a cost breakdown tells you the interest rate, the APR. And it truly allows a consumer to put options side by side from one lender to another to help promote the informed consumer and hopefully, somebody's getting a good deal and make sure they do work. With the correct mortgage professional mark, of course, if they aren't focusing you in on the low interest rates, they're focusing in on the cost. I listen to a local sports channel from time to time and it is a hotbed of mortgage commercials.

One of the big advertisements is the no cost mortgage, they're going to give you the the low rate, and it's not going to cost you anything. They especially advertise this for refinancing, what is really going on with this because no one's working for free. And no one's working for at least not to my knowledge. You got to pay the bills to keep the lights on certainly in every company. But there's there's a couple of different ways that they do this and the consumers need to understand they may be hearing what they want to hear. So there's a couple different ways to structure mortgage loans and pay for closing costs.

Certainly you can write a check at closing for all the normal fees and get what you want. But then other different ways when they say no cost, make sure you're not hearing nothing out of pocket. Two different things. If you don't come anything due at closing. It may just mean that money's been added to your loan balance. You go in and you get some imbalance that you have and suddenly thousands of dollars are added upon it at closing.

And by the way, not a bad strategy for the right person if that's what's needed, but a true no cost loan fees exist. I mean, underwriters closers, title companies they're doing their jobs they will be getting paid. The difference is you as the consumer may not be writing the check for those fees, what may be happening is the interest rate may get increased. So it's a trade off by paying more interest over the course of time to the mortgage servicer to the mortgage provider. They in turn will give fees up front that allow it to be a no cost loan, so nothing gets added to the loan balance. Nothing will be due at closing, but your rate will be artificially higher than what you could have would have should have had.

So again, it's just important to understand that those options exist. Talk about them with your mortgage professional and make sure you're picking the one that's right for you. Well, let's talk about mortgage insurance because this is used in some marketing schemes as a means to get you a lower payment. first talk about what that is. So mortgage insurance has many names, mortgage insurance, EMI PMI, EMI p, again, they all essentially made the same what mortgage insurance is, is it's insurance to protect the mortgage banks, the mortgage lenders, if there's a loan that doesn't have 20% down for conventional financing, mortgage insurance will exist. And that's not a bad thing because it does allow you as a consumer to buy a house without having just that big 20% down payment.

So again, mortgage insurance is there to protect the lenders in case someone were to default or get foreclosed on. It ensures the lenders they get their money back some products and some programs like FHA, for example, mortgage insurance is mandatory, regardless of your down payment. So again, goes back to the understanding what your options are and why you might pick one program over another. Now mark, how can they use the elimination of private mortgage insurance as a means to make a refinance actually look like a good deal? Great question. So again, If the mortgage insurance can exist, let's let's take conventional financing.

That means kind of your bread and butter, plain vanilla type loans that that you'll hear most advertisements for a refinance can be construed as a good thing, if, if the payment goes down Well, in reality if the mortgage insurance just get eliminated, because maybe there's enough equity in the home now to not need it for the refinance, somebody could spend that refi to say it's worth it to do it, even though maybe there's not much of a benefit in terms of rates or other products. Well, if that's the case, what folks need to know is that mortgage insurance, you don't need to refinance to get gone for conventional loans. So again, understand that just because the payment goes down, doesn't mean that you necessarily should refinance. Again, mortgage insurance, it's relatively inexpensive, it might cost 200 bucks or something to remove it, but that can be done without refinancing.

So just because they can get rid of the EMI and refi doesn't mean that's the only way to get rid of the mortgage insurance. Well mark, they can also get rid of private mortgage insurance by having the consumer prepay it, which is an awful idea. Talk about how that could look like a good idea, though. Sure. And again, like anything else, there's variety of ways to structure a loan and mortgage insurance on the conventional programs can be essentially done in four different ways. The most common the one that most folks know is the monthly component, it's paid, you know, paid every month that goes out the door, it's part of mortgage insurance.

But another option is you just alluded to is paying it upfront, that this will determine based on credit scores and down payment options, but somebody can essentially buy out or prepay the mortgage insurance where you can say, I don't want this monthly component. Let's throw in and it's typically somewhere around three, maybe four years worth of that mortgage insurance up front. So again, the idea is, you know, is it worth it not worth it depends on the house. The real estate market, if it's the markets are praising and appreciating and we're going to go in and do improvements on the home. You wouldn't want to prepay that piece up front. Because again, if I'm adding 2030 grand to my kitchen to make it nicer, that may improve the value by that much or more, and I might be able to get that in my monthly component to go away.

So again, the prepayment piece, not always a great idea, it works for a select few. The other last option that I kind of alluded to is that you can prepay with your interest rate. So you can forego that monthly piece. And instead of paying those thousands of dollars up front, up to take a higher interest rate instead, again, not a great option for the for the vast majority, but it can be used effectively for the for the few that maybe don't plan on being in the house for more than just a handful of years. So again, it's just knowing the options and what's out there and picking what's right for you. Well, Mark, another aggressive marketing scheme occurs when a mortgage insurer will claim they'll match any offer now what is going on with that claim?

Well, in theory, you would think every mortgage company can make that claim because mortgage rates mean we're all going to the same sources in the mortgage industry, Fannie, Freddie typically have their their rates and kind of talking inside the box VA, FHA, USDA. In theory, they should all be comparable from one lender to another. What may vary is by a few hundred bucks, maybe 200 bucks or so the fees from one lender to the next. So in theory, everybody should be able to match and become competitive, which what you have to be wary of, is when somebody does claim to be that lowest or to meet or beat any price, because if something seems too good to be true, and it's too far beyond anything you've got you've seen elsewhere, that's when I would issue caution. I would just say, you know what, let's, let's make sure you're comparing apples to apples because again, rates today could be higher or lower from last week.

And it's just comparing, again, apples to apples to make sure you're comparing the right programs to one another, the right price and on the right day. But in theory, if you talk to two or three folks you truly trust and they came to you and they're all about the same that's a good deal. You're getting some from you know, online or In the Internet, and they're there, they're guaranteed to be the lowest somewhere else, I'd be a little little weary. Now mark, if you've gone through the mortgage process, you know that it can take a lot longer than you'd one would think, talk about how the guarantee to get the mortgage done in a certain time period is actually very problematic. Well, you're right. I mean, if anybody's gone through the loan process here, since the mortgage meltdown, in the last, you know, five or six years, you know, the pendulum swung, and the paperwork is just, it's intense.

So it does take a while what folks don't understand is a number of third parties involved with the transaction, whether it's the title company, the insurance, the appraiser, the IRS, for that matter, we have to validate tax returns in our world. So with all these things to say, to guarantee this, you know, very quick, very short closing, I would say, Sure, most competent mortgage professionals can probably make those dates but to truly guarantee it, I almost call it irresponsible, but you just have to be aware that there are things Third parties that come into play. And sometimes the IRS won't move as fast as they want them to. So again, to guarantee that close date, you know, there's no guarantee in life and but death and taxes. So again, just be cognizant of what it is you're looking for and what's important to you. You know, Mark, as a side note, how important is getting a mortgage consultant who is good at the service part?

I mean, after all, the mortgage process can go south in a hurry. And if you're working with someone more focused on the money than the process, you could have a real problem. Absolutely. And again, that's where you build a business for the long term you want to provide you want to choose a consultant, how do you kind of make sure you work with somebody to your point is, you got to work with somebody who's going to get to know you get to know what your your wants, and desires are your short term objectives, your long term financial goals, and then make sure those options align with what you're looking for. So again, it's the options are they asking you questions, are they giving you options, that says you know, Option A, option B, option C all match for these reasons. We don't like these others for these.

So, again, it's important to work with somebody does have your best interests at heart. There's too many third parties involved in the transaction where things can go wrong. So I tell folks, the only two things that we control is you as a borrower is being responsive to us and communicating well and for us to do the same. Because again, there may be problems in the in the process from third parties, but to know that we're here on your side and think is the most important piece. You know, Mark with an aggressive mortgage salesperson, there are some red flags to be aware of one has to do with your credit rating. An aggressive mortgage salesperson doesn't want you to go around and shop and compare their mortgage proposal to another dusts.

They'll issue the threat you're gonna hurt your credit if you do that talk about what's really going on with that one. Yeah, that that that's a common misnomer. I mean, the fact of the matter is, if you go out and pull seven different credit pools and get credit cards today that that will hurt your credit. That's that's different. But what I tell folks is think about it this way, the credit models, the credit, you know, they want you to Be an informed consumer, they want you to do your due diligence to understand what options you do have in front of you and not to hold you hostage or beholden to one particular company. Same goes for auto loans.

So for mortgage and auto loans, if you do your shopping, and it's coded as a mortgage, you can have multiple polls and not have it impact your credit, let's just say it did, for some reasons, some third party credit company that a mortgage company uses didn't code it correctly on the credit report, you're talking maybe one to three points on average for what a credit score may vary, which which really wouldn't have any major impact on your on your overall financing. So again, if somebody tells you don't go shopping, don't get your credit pooled. Try to understand why they're saying that. And there's those rare examples. There's not often but there's a rare example where somebody maybe just right on the cusp of qualifying or not because they got a score and let's say the low six hundreds, maybe, maybe but even then I would say be very cognizant because again, you don't want somebody to Don't say tricks that may not be the right word, but to threaten in order to scare you to not do your shopping because you need to be an informed consumer.

You know, finally, Mark, as we had discussed, there are a lot of different variations and types of loans. How do you even know that the loan being presented is the right type for you? Great question. I think they're, the only real way to know is to again to go in before you have the conversation and know what's important to you to know if there's a payment objective you're trying to meet, and whether it's a down payment objective or money in your pocket or out of pocket expense that you're trying to achieve. So one, I would say try to identify your goals and what's important to you. And then to ask questions.

I mean, that's, that's really the biggest thing I can I can recommend is why why is this one right for me what else is out there? What other programs have we not talked about that I should know about? Because the worst thing you want to do is go to work after you closed on a home loan, sitting around the water cooler and understand that the guy next to you just got something That would have been perfect and you never even knew about it. So it's knowing your options. That's, I think knowing your options, knowing your objectives, and find out where those two things meet. That's where you know, you have the right option or the right program for you.

Well, Mark, if viewers wanted more information, where would they go? mortgage mark. com. Very good. Well, here's the bottom line. When real estate is booming, the mortgage marketing is aggressive.

As so many companies compete for your business, some of these companies will make more promises than a politician trying to get reelected considering that this is one of the biggest financial commitments you're gonna make and how complex the behind the scenes process can be. You need to make sure you understand how the game is played, and find a true consultant who is focused on your best interest and not Thrones. I'm Bob Brooks. Keep the faith and have a great rest of the day.