The Mortgage Pro and the Better Deal

I was talking with a borrower the other day about a purchase and he wanted the “best deal possible”. I’ve heard that phrase hundreds of times over the years, so why was this time so much different? Why did this time stand out to me? After I started thinking about it, I thought I would share my thought process with you.

When I sat back and really thought about it, the term “best deal possible” or “better deal” can mean totally different things to different people. For instance, when we as brokers hear that term, we immediately think of quoting a lower rate than our competition, right? There’s nothing wrong with thinking that way, that’s the way most of us were taught. But what about the borrower? Is the “better deal” one with a lower rate? A lower closing cost? Lower payment? Fastest closing? No paper work? (just naming a few)

Now, in my case, I happen to believe the Pay Option Arm is the best mortgage on the planet, period. Is the POA for everyone? I can make a strong case saying yes, but just because I can make a strong case for it doesn’t mean it’s the “better deal” for that particular borrower.

Some people will argue the POA is only good for people with fluctuating incomes, commissioned sales, or seasonal work type of people. Others will argue that only people with high debt should get the POA so they can apply extra to help pay off bills. I have actually heard someone say a good quality borrower would NEVER go for the POA, it just doesn’t make sense. My point is with each of these arguments, the “better deal” is totally different for each person. Neither is right, neither is wrong, they’re just different.

If you believe the POA is a “better deal” for seasonal work people, then it is.

If you believe the POA is a “better deal” for commissioned sales people, then it is.

If you believe the POA is a “better deal” for the more sophisticated borrower, then it is.

Your belief is your belief, stay with what you believe. But don’t blow off other programs because what you believe to be the “better deal”. Remember, you are getting paid to be a mortgage consultant, not a rate taker. Now, if you work at what I call a “chop shop” or a “churn and burn” place and all you do is quote rate, what I’m saying here may be over your head. This is not meant to be insulting, it’s just the facts. If I just described your office setting and you’re making money, great! Keep it up! But don’t tell me you understand the POA and you can give a “better deal”, because it just isn’t so. Again, a “better deal” to you may not be the “better deal” for the borrower.

The bottom line is you have to go beyond the “I’m looking for the best deal” statement, because that statement alone doesn’t really say anything.

Back to my borrower who wanted the “best deal possible”. This client has a 795 mid score, has a salary of $225k/year (plus bonus and his wife makes $50k). For those of you that would just quote the lowest rate possible and hope he doesn’t shop you around would have lost if I were in your market. The “best deal possible” to him wasn’t the lowest rate. Let me tell you this: He is buying another home while his current home is listed, he is paying his mother’s mortgage, he has two kids in college and the third he’s sending to a private high school, and he just had to buy two cars because his and his wife’s car died in the same week. After talking with him, all he knew was to ask about lowest rate because that’s all he hears on TV/radio. So, the “best deal possible” to him really wasn’t rate, it was financial options. Oh, his back end ratio AFTER figuring in the new mortgage was about 27%. The dude is an extremely good borrower and can get any kind of mortgage he wants. Guess what? After explaining the POA to him, he literally signed the paperwork right there. He’s never heard of it before and he didn’t’ know things like it existed. Do you think he’ll tell his friends and realtor about me? Count on it.