Which Mortgage Loan is Better? Which Would You Choose?

Real life scenario. Which loan would you choose?

A young married couple was buying their first home. They compared two offers. One from a credit union they were members of; the other from a full service mortgage company where they knew the loan officer to be honest and ethical.

Both loans had the same interest rate.

The credit union had two lender fees = $96

The full service mortgage lender had one flat lender fee = $1,395

Title, escrow, recording, property taxes, insurance would be the same with either lender.

After one week, the credit union had not yet responded to their online application or phone messages.

The full service mortgage lender responded with a phone call within the hour and followed up with an email the next day.

Which of these lenders would you choose?

The young couple chose the credit union. As the wife said, “We were both members before we were married, and we love our credit union.” They also wanted to save money on the lender fee.

What Happened

It took several more weeks of making more phone calls leaving messages to get the credit union to respond. By the time an application-taker got back to them, the interest rate they saw online had gone up. Nevertheless, they proceeded.

Six months and ten days later, the loan finally closed. In the meantime, interest rates had gone up even more. They had to pay five more months’ rent than they would have with a 30-day closing.

If they had locked with the full service mortgage lender, they would be making a smaller monthly  payment every month for the life of the loan, and that would have quickly made up for the higher lender fee.

What’s more, they would not have gone through the extra stress and anxiety. In the end, the wife said to me, “We hate the credit union!”

There’s More to the Story!

But it gets worse. Shortly after closing, the credit union sold their loan to a national mortgage company that they dislike and don’t want to do business with. So they didn’t end up getting their beloved credit union as their loan servicer anyway.

I have a friend who is a waiter at Ruth’s Chris Steak House. He says, “If you want a great steak, go to a steak house. That’s our specialty.” In agreement with this principle, I say, “If you want a great mortgage loan, go to a full service mortgage company, not to a lender that specializes in checking and savings accounts, car loans, boat loans, signature loans, and throws in some mortgages to the mix.”

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