As our regular listeners of LodeStar’s Lending Leaders likely know, my wife and I purchased a home this summer. You also likely know that I basically grew up around real estate closings and all that comes with them with my father’s title business. So you’d think I’d have all the answers going into my own transaction.
Ok, actually, I had a fairly good idea of what to expect going in. However, me and my wife took a real estate 101 course, offered by Lending Leaders alum Stacey Rihl. That course reminded me (or, in some cases, taught me for the first time) how many moving parts there really are in the homebuying process—many of which aren’t even cost-related!
Even though my wife and I were reminded repeatedly that we were crazy for entering a market with—gasp!—five percent interest rates—we knew that it was time. And thanks to my experience, we also knew that a 30-year fixed-rate mortgage isn’t the only type of home loan out there. So, we ended up going the way of an Adjustable Rate Mortgage (ARM), which kept our monthly payments within our budget.
And although I had some idea of what process was supposed to happen when, we did see several instances in which potential partners (lenders, REALTORS, title companies) reminded us that the home loan process remains unnecessarily complex and unclear.
To find our perfect mortgage, my wife and I underwent a pre-qual process and received a rate that we then shopped around. One local REALTOR suggested a mortgage broker, who also provided an estimate. Oh, yes—forgot to mention. We also ran the address through LodeStar to be sure the calculator’s rates lined up with what the lenders were quoting on our closing fees!
We found our REALTOR by starting (but not ending) with Zillow. What’s unusual is that we didn’t end up going with anyone we found through them. However, as anyone who’s used Zillow knows, we heard from an agent within minutes of typing in our contact information. While we didn’t move forward with that REALTOR, we’ve established a lovely relationship with their CRM.
We bucked what’s become modern convention by using my wife’s friend and co-worker, who had quite a bit in common with us, and had real estate experience in her blood (her father was an appraiser). All of this reminded us that ours remains a relationship-based industry. And while many parts can (and should) be automated, local expertise still calls for a human touch.
We also experienced just a bit of the shadier side of our industry…
One of the early houses we looked at (and later rejected) came with a seller’s disclosure informing us that the property’s title search has already been run by XYC title company. So we might as well use them. This led us to ask, of course, “What don’t you want us to find in your title history?”
Even though we had hand-picked our own title company, one lender, which had its own title company, provided a quote at our request (Can’t shop too much!). We were treated to a quote for an “enhanced policy” that basically included $3,000 in unnecessary services. Nice try!
Finally, we were reminded about the “dark period” between sales agreement and closing that leads to a lot of anxiety and hand wringing. There was a lot of back and forth between us and the REALTOR, lender and title company and, I have to say, even though I have a natural title bias, we felt our strongest advocate was the title company.
It all came to a somewhat anticlimactic, albeit, happy result. Unfortunately, my wife contracted COVID just in time for the closing, which had to be done in split fashion. So I attended, along with my eight-month old, plus the notary…all of us in masks. Nothing unusual for the times, I suppose.
While our journey, compared to some, was fairly smooth, I have to believe at least some of that came from my decades of preparation. Most first-time home buyers might not know much about mortgage brokers or non-traditional mortgage products. They might assume that an “enhanced title policy” is the only policy available—“What’s title insurance anyway?”
We still have a ways to go with the clarity aspect of the transaction. But it was interesting, to say the least, to get a look at the process from the consumer perspective.
By the way, if you did miss our LLL reflections on the homebuying experience, please do have a look!
We at LodeStar are grateful to all of our clients, friends and colleagues who take the time to view Deeper Thoughts. Please consider having a look as well at some of our other great content, including our podcast, “LodeStar’s Lending Leaders,” and “A Tale of Two Mortgages: an original webcomic for the mortgage industry, presented by LodeStar.”
As always, your feedback is welcomed and appreciated!
Read our CEO Jim Paolino’s Deeper Thoughts and get the latest mortgage industry news.