It is quite common to hear borrowers say they will refinance or want to refinance with their current mortgage lender because they have good credit and have paid their mortgage on time. The thought behind this is that the current lender will give them something great because of their good history. This is a fallacy. Read: Chase slow to process Summit woman’s mortgage refinance.
Having good credit and paying the mortgage on time is what happens with 90% or more of the bank’s customers. We don’t get a break for doing what is expected. Our lender fully expects the mortgage to be paid on time. It was part of the agreement we signed when we borrowed the funds.
If two equally qualified people call Wells Fargo for a loan, the representative will quote them both the same offer regardless whether one is a current customer or not. Being a customer already does not enter into the equation. It won’t make the loan process any quicker, cheaper or easier. Our credit and payment history will be checked and verified for the new loan regardless whether we use our current bank or a new lender. A credit report is pulled and they have the answers in 45 seconds. A lender will not rely on data from their internal files. The process starts anew.
A few weeks ago, a colleague told me one of his bank customers (at a well-known bank) applied for a mortgage loan. He had $60,000 in personal checking/savings in the bank plus another $90,000 in a business account. His credit score was over 700. Not only did he not get anything special, his loan was denied.
With the exception for the Donald Trumps of the world, the bank doesn’t give brownie points to customers. We must qualify for the loan based on standard mortgage criteria. There are no exceptions and no special deals. Unless we have real “Trump-like” assets in the bank, we simply are a very small pea in a massive pod. The representative on the phone could care less.
Occasionally, banks have specials for customers for home equity lines of credit. However, often anyone can get that same benefit by simply opening a checking/savings account.
More than a few customers have complained that their big bank was taking so long to process their refinance. I wonder if that has anything to do with the bank not being in a hurry to lower the interest currently being earned on their money. Maybe not. But it’s a thought.
You may find some lenders who want you to “believe” you can get something better by staying where you are. But the only way you will know is by pursuing your options with at least 2 lenders. And always consider EVERYTHING, not just the rate. A low quoted rate is useless if it doesn’t materialize in the end.
Til my next post . . .
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{ 3 comments… read them below or add one }
I firmly believe Wells “Nogo” intentionally held up our loan from closing. The guy there kept asking for more and more crap until they said we didn’t qualify due to our debt. Didn’t the buttholes know that when we applied? We were put on hold for 76 days. We then went to a broker referred by my cousin and we were done in about 4 weeks.
Wells was incompetent with poor customer service and the guy didn’t appear to know how to do his job. Our checking account has since been moved.
Well put! The big banks and servicing companies are so slammed dealing with defaults and short sales the last place they are putting resources is into loan origination. I have heard of people waiting 3 to 4 months for “their” bank to get back to them and informing the client that the rate has expired. The big 4 are putting untrained, underpaid loan monkeys behind desks and they are expecting to keep customers. Any day of the week a quality broker will have better service, rates and fee’s.
screw the big banks anyhow. no bailout from me.