Are online mortgage lenders more problematic than traditional ones?

You first need to ask why a loan becomes problematic in the first place. The answer to this could be a tricky one. Borrowers and loan officers both blame the lenders, brokers, processors, underwriters, appraisers and anyone that may touch the loan.

In other words, it’s the biggest chain of the blame game in any transaction. Yes, we know the process is broken, likely beyond repair. Companies like SoFi are the closest answer to a peer to peer process that can fix this chain but we are still a long ways away from a good solution for the mass market.

Bottom line is, online, brick and mortar or your cousin’s best friend’s broker is all the same when it comes to the process. The process is not good and problems are bound to happen regardless of how great your loan is.

Pricing is another matter and that is something that is being addressed by us so even if you get a crappy process, you are at least not overpaying.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

Should I shop around for mortgage rates? How would you do it?

You should shop around for a mortgage if you want to save an average of 25  thousand dollars. That’s what the average borrower leaves on the table because they don’t know how to shop for a mortgage.

The problem is borrowers do not have the right tools to shop. They google, they connect with the first few brokers offering rates that catch their attention but the problem is they just become leads, get harassed and give up.

Most of the so-called “Comparison sites” (Lending Tree, Bankrate, Zillow) etc are all just lead generation models that barely dent the surface when it comes to shopping for a mortgage.

Parlend, on the other hand, calculates the lowest rate you can qualify for your loan and finds a loan officer, from among the 400K loan officers out there, who can offer you that rate, all anonymously, and with just a single click.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

Why do mortgage underwriters wait until the last minute to request documents to close a home?

The mortgage process is severely broken almost beyond repair. There is a bunch of old and new startups including Quicken Loans “Claiming” they are trying or have fixed the process. Not even a chance. The reason is that underwriters are just mid-level workers.

Imagine your school principal doing your surgery that’s exactly what it’s like. I come from a family of surgeons and can tell you Just like surgery, underwriting has a lot of moving parts that require precise detailed attention. They will overlook things and make more mistakes than a trained surgeon who has attention to detail and immaculate memory to go with it.

Are we going to pay someone what a surgeon gets paid to do underwriting? Nope so, in other words, this broken process continues until the business is overhauled with future tech Blockchain etc. Document verification etc is a big part of the problem and tech will likely fix that to a high degree.

Until then borrowers will be asked for the same document 3 times and underwriters will hold up closings because they took a long lunch.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

Must I use the mortgage company that my builder directs me to?

The short answer is HELL NO…..When there are 400 thousand loan officers with different rates, why would you just pick one? With that said, builders will typically throw in some sweet incentives to get you excited. New refrigerator, landscaping and of course ZERO closing cost.

Incentives are wonderful but if they are giving you 5k in incentive and you can save 30k elsewhere where would you go? if you said 5k I don’t really have a good argument for you.

Your best bet is to properly shop the mortgage then take your best offer to the builder to match and throw in the incentive if they don’t want to lose the deal. That’s how you negotiate with a builder who has an inside deal with an LO.

Unfortunately, due to borrowers lack of resources, builders and agents can take advantage of them directing to their own benefit.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

What is the most stressful part of getting a mortgage?

The most stressful part of obtaining a mortgage is the mortgage underwriting. The appraisal process is a delay period which can easily build up stress.

Usually, the mortgage underwriter evaluates the borrower’s documents to check if they are creditworthy. This evaluation period, however stressful, is essential for the mortgage broker to make sure you would not default in the future. If there are issues with your financial history such as a not-so-perfect credit score, or an inability to provide vital documents, getting a mortgage can be a frustrating process.

The underwriting stage is also the point at which the underwriter (usually one person) looks at your pay stubs to check if they are too old or needs more income when matched against your tax returns. If the underwriter needs more information he will ask the processor, the processor will check for it in their files and if not found will ask the Loan Officer to get it from you.

It builds up frustration and delays which may affect the purpose of the loan and as a result, the loan may be rendered ineffective. In extreme cases, it leads to loan’s death— Low wage employees combined with the inefficient protocol is the culprit.

However, all hope is not lost. There are startups springing up to solve this challenge. Peer to peer companies like SoFi have the best shot at solving these problems, however, they don’t have the necessary capital to operate like secondary markets. Until then you will submit your pay stub 3 times, get questioned on your rental income write-offs and given the financial colonoscopy.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

Why do all mortgage brokers offer such terrible service?

It is not the service, it is the mortgage process which is broken at its core. The process is broken because of one single step, “Underwriting”. This stage of the process is where a human (the underwriter) looks at your supporting documents (pay stubs, assets etc) and confirms your ability to pay for, say the next 30 years.

The “underwriting” stage in the mortgage process is often the main reason why mortgage companies offer services that are not satisfactory. Many aspects of the mortgage process are now automated, largely with the advent of emerging technologies like artificial intelligence and machine learning. Nevertheless, humans cannot be totally eliminated from the mortgage process; and, humans have emotions.

Like every human, they could be nervous. This is because it is risky, as they are placing a bet on a borrower’s ability to repay a loan. Also, the borrower is nervous because the deal could fall through. So there are a lot of emotions riding on this step alone.

Can this process be fixed by tech?

Yes. Peer-to-Peer lending companies like SoFi are working on simplifying the whole process to eliminate the usual challenges that both borrowers and underwriters face.

Will it be fixed?

Well, maybe not soon. It requires a huge capital to issue loans, and it is hard to have access to huge capitals if there are no government backings.

So regardless of all these startups and established companies like Quicken trying to “Rocket” your app or use blockchain or “insert your own tech term”, it is still a marketing ploy to fool the borrower into a process that may or may not fall apart.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

How much money do you need to have in the bank before applying for a mortgage?

Depending on the type of loan, you may access a loan with zero down mortgage. There are programs designed to get you a house with ZERO down payment or have the seller kick in 3% to cover the cost. However, we do not recommend such practices.

There are several hidden costs associated with homeownership that many borrowers are not aware of:

  • Inspection cost
  • Appraisal cost paid outside of the loan
  • Possible repairs before moving in

It is always wise to have some amount of money in your account to cushion yourself when applying for a mortgage.

This is why you need an extensive and reliable set of shopping tools. At Parlend, we offer free mortgage shopping tools that will help you in finding a fair rate and cost in real time, while keeping you anonymous.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

What are some of the worst-case scenarios when buying your first home?

For every endeavor, there are merits and demerits.

For the purpose of this subject, I will only tackle the worst-case scenario as regards financing your home loan. We will leave the “Meth lab in the basement” theory to others.

Generally, the borrower is on the receiving end of a system that is designed to favor the lender. So when they shop for a suitable mortgage, they end up leaving thousands of dollars on the table.

In this section, we are going to explore a few mistakes that borrowers make when they are shopping for mortgage rates:

1. Allowing Comparison sites to compare home loan rates

Many of the comparison sites online are lead generation platforms. They are only interested in obtaining your personal info. They want your personal info, because, as lead gen sites, your personal info is their product to the lenders. So they are essentially selling the personal info you entered their site to the lenders who pay them a fee for each person’s personal info. They have no interest in your financial goals.

2. Using a loan officer recommended by your friend or Cousin.

According to CFPB, 75% of borrowers only shop with one lender. There are many reasons why borrowers choose to use one loan officer, but whatever the reason may be, it does not justify limiting your options to get the best mortgage rates. Choosing and sticking to one loan officer based on proximity and other non-financial factors is not a good idea, as it has been proven that the average borrower leaves close to 25 thousand dollars on the table during the shopping process.

3. The trap of one lender

One Lender, One rate right?

Usually, one lender could have thousands of Loan Officers (LO).  Many borrowers think they are using different lenders when they change their loan officers, only to find out that they have just subscribed to another package of their lender. In a bit set up their commission plan, each LO would offer different pricing.

This is why you need an extensive and reliable set of shopping tools. At Parlend, we offer free mortgage shopping tools that will help you in finding a fair rate and cost in real time, while keeping you anonymous.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

Does it hurt my credit if I shop around for a mortgage?

We can’t stress this enough, but you have to be really informed about the mortgage process, in order not to ruin your credit scores. When you start your mortgage rate shopping, a typical dialogue with your loan officer will often look like this:

You: I like to find out your rate

You: I like to find out the best rate for my mortgage
LO: Well that depends on what your profile looks like…. how is your credit?
You: My credit is good I think I have a ???
LO: Well I have to do a credit pull to know exactly what your score is, otherwise I can’t quote you

The response from you here has to be “Give me your best-case scenario with zero points.” The Loan officer will tell you their rate without having to pull your credit.

It is important that you do not allow anyone to pull your credit; it is unnecessary. Early on in the conversation, loan officers do this; they would have pulled higher scores, therefore, getting an upper hand by being able to offer a better rate. Of course, not all LO’s do this, but you, as a borrower, will have no recourse and finding that out the hard way may be costly.

Tell them your credit score (which I am sure you know) and demand their rate. PERIOD. To do this effectively, you need a mortgage comparison shopping tool like Parlend’s Mortgage Rate Calculator that offers free mortgage shopping tools that will help you in finding a fair rate and cost in real time, while keeping you anonymous.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora

Get a 15 year home loan and save on interest or get a 30 year loan and save for retirement?

Well if you watch a lot of TV, then you are probably seeing Quicken and other lenders force borrowers into a 15 year home loan, and that is because they are trying to make some easy money on your back.

15 Year fixed has a few side issues that most people don’t know and the lenders won’t mention.

First off, it is hard for a borrower to qualify for the 15-year fixed due to the high payment, so it pushes the debt ratio higher (which is commonly an application killer). In addition, when you sign up for a 15-Year fixed, you are in what is called a “payment shock.” Payment shock is a situation where your payment almost doubles, and this may lead to some lifestyle changes to accommodate the unexpected shift.

Aside from all that, it is important that you focus on your ability to do something else with the money during the term; this is more valuable. For example, remodeling will increase the value of your home and could be a better return over the long run.

As a matter of fact, if you take the additional payment that you have to shell out for a 15-year loan and applied it to an index fund, you would likely be a multi-millionaire by the time you retire.

For your mortgage comparison shopping, check out Parlend’s Mortgage Comparison Shopping tool, that will help you in finding a fair rate and cost in real time, while keeping you anonymous.


Check out our free mortgage shopping tools at https://www.parlend.com

This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora