ADAM GARRETT

  What a Buyer Can Use to Buy a Home

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1. While I’ve worked with various cash buyers, from investors to the rich, to the frugal, the majority of those that I work with use a lender. Rather than just going with one lender all the time, it is best to tailor which lender you choose based on your situation. I generally recommend a local lender over someone online, keeping in mind the programs to reduce home cost that they have available, the types of loans they have available, their interest rates, how helpful they tend to be in the process (such as boosting credit scores), their ethics, and their knowledge in the industry. I also recommend showing me prospective lenders' rate sheets before making a decision. In the past by showing me a rate sheet, buyers have decided to go with a completely different lender than they were originally planning on using because they did not see the holes in the rate sheet which made the sheet appear deceptively significantly better because of inaccuracy. The deceptive lender was not one that I recommended to them originally but was an out of town lender. Out of town lenders have a much easier time with deceptive practices because they do not have as much of a reputation to uphold, especially if you cannot find a significant amount of reviews on that individual lender. 

   • No lender is perfect. Some lenders will be rather unresponsive, others will be uninformed, others will have poor ethics, and others will not have a program that you want to use to save on home costs. While no lender is perfect (I point out some that tend to be worse than others that I do not recommend in this link), to see some potential lenders, including some of their strong suits, click here.

   • I recommend looking into programs to reduce home costs before getting credit pulled by a lender. Certain lenders are able to do different programs than others. When getting credit pulled by lenders, I suggest doing all of the hard inquiries on the same day. That way you minimize the impact on your credit score and have all the lenders pulling from similar base rates for comparing the various lenders’ rates.

   • While many do not consider the ethics of someone they are hiring for a real estate transaction of critical import, ethics are absolutely essential when making hiring decisions involving what is most people’s largest asset. Someone with a high level of ethics is more likely to treat your best interests in mind, whether they are required to or not. For instance, in the past month or so at the time of this writing, I spoke to a mother of a disabled adult who was looking to purchase his first home. She excitedly told me that her son had been preapproved. When I looked at the pre-approval, I was immediately disappointed at whomever their lender was from their own bank, a person I had never met. The reason was that their lender had preapproved them with an Adjustable Rate Mortgage. An adjustable rate mortgage helped them to get a higher purchase price, and a higher purchase price usually means a higher commission for the lender. What the lender failed to communicate to them was that most educated people in the industry stay away from ARM’s. The reason why is that we are currently near historic interest rates (at the time of this writing). The only place where rates are realistically going is up. While an ARM will always be lower than a fixed rate initially, when considering the fact that you are near historic lows, and that rates have been over triple what they are now in the past, an ARM, in my professional opinion, and in the opinion of many other real estate professionals, is NOT a good idea. While it might mean a higher initial purchase price, which is helpful to a lender’s commission based profit margins, it is a recipe for greatly increased monthly costs which could lead to foreclosure if the buyer is not able to keep up with those increasing costs as interest rates rise. The fact that the lender did not inform the buyer about this matter of great concern regarding her disabled child is, in my opinion, clear evidence of that lender’s lack of ethics, as he would be much more familiar with ARM’s than the unsuspecting mother who was just trying to help her son and saw her son’s ability to purchase a higher priced house with the ARM that the lender presented, with negligible if any discussion regarding the potential pitfalls of an ARM to educate the mother. In my opinion, a lack of ethics always corresponds with a lack of wisdom, whether one can see the wisdom and positive traits in ethics always or not. In this case, he might be able to make a quick buck off of someone if I had not warned the mother about ARM's, but when the disabled child had rates that went through the roof, the mother could become very disappointed with the lender for not warning them and that is not the kind of person that they would refer to other buyers.