September 19th, 2009 2:19 PM by Diego Quintero
In the past few months I have been on the phone with many real estate agents asking for loan commitment letters or Loan Status Reports (LSR’s). The LSR is a form that represents a bank approval by the potential buyer. It shows the dates that the mortgage consultant reviewed personal data, like bank statements, pay stubs, tax returns as well as the completion of a loan application. These are all important facts required to submit a purchase offer and helps the seller(s) understand that the buyer is ready to move forward if the offer is accepted.
At most of the larger banks, the process may be more complex than at a brokerage. They usually take several hours to get out a loan commitment, they are unwilling to help the applicant formulate a strategic plan to purchase in the future, and their rates are usually higher. However, they market their products really well, which may sway the average consumer. I am competing with the large banks on a daily basis and the way that I compete with them is by using wholesale lenders who can offer the rates at lesser costs. Sort of like shopping at Costco versus Target. If you don’t buy in bulk, you won’t get the best deal. Using that line of thinking is exactly how wholesalers and brokers work together to consistently beat the big banks. If a brokerage is closing a lot of wholesale business, they get the perks of offering better, lower cost products.
Unfortunately, the service across the industry is poor, at best. It is especially poor at the larger institutions where they have too many people involved with your personal data and things get lost, misplaced, or they lose contact altogether. The next time that you apply for a mortgage, test it out – get an application at a large institution and get a copy of the Good Faith Estimate and the Truth-in Lending statement. Send me the estimates so that I can help you understand the data. If you want to compare rates and costs, use the annual percentage rate (APR) to determine who is giving you the better deal. Don’t forget to factor-in the service! Nine times out of ten, a broker will beat the big bank rates and while I cannot vouch for the service of other brokerages, I can promise you that your experience with FSREI will be surprisingly pleasant.
Thank you for reading! I look forward to reading your comments in my email and online!
Diego L. Quintero