Getting a mortgage is painstaking work, but with the right broker at your side, things can be made so much easier. Today’s guest explains why it is essential to ask your mortgage broker some brutally honest questions so that you can work towards a win-win setup. Joining Merrill Chandler on the podcast is Jennifer Hammond, a real estate executive at TTR Sotheby’s and talk show host at SiriusXM satellite radio. Jennifer and Merrill go over the 17 questions you should ask your mortgage broker and reflect on how important it is to ask these questions, especially during this pandemic. Whether you’re going for your first mortgage or a refinance, the choice of the right mortgage broker can make all the difference as you go through the process. Make sure you know what to ask your broker to get the best out of them.
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17 Questions Intelligent Home Buyers Ask With Jennifer Hammond
We’re going to be talking to Jennifer Hammond, one of my heroes and a real estate pro. We’re going to be talking about how COVID and how to grade, how to evaluate, how to make sure you ask the right questions of a mortgage broker before you engage.
I want to introduce you to Jennifer Hammond. She is my hero. I know her for years. I have a great story to tell that you may be even unaware about this. One of my goals back in 2013, I took a personal development course, and this personal development course was ten months long and the end game is you had to set a goal for what you could achieve at the end of this period. You knew you arrived if you had fulfilled this goal in ten months. My goal was to be able to leave my business and trust it to my associates, my team and everybody, so that I could go walk El Camino de Santiago, the 500-mile pilgrimage in Southern France and Northern Spain without having texts, not checking in, that I could trust my entire team to run the business without me.
I hit it, but while I was gone on the pilgrimage, Jennifer, who had seen or heard about me from various real estate conferences we’d both been at, but would never be introduced to each other, she calls in to my team and says, “I want to have Merrill on the show.” All of a sudden, I wasn’t there. She interviewed one of my partners the very first time and off to the races. Not only did I get to leave Jennifer, but you were like the icing on the cake. While I may be some of the personality of it, but this thing works without me being there. You were the prize. From my perspective, that’s how our relationship started.
Thank you so much because I never knew that story. It was so funny because I remember I have always wanted to ask you because when I first met your partner and had him on, I was like, “It’s interesting how it’s switched,” and it’s been such a blessing. We have many beautiful stories about people changing their lives. You’re one of my favorites on this show and one of the most popular because when you can change somebody’s knowledge of their credit and funding, you can change everything. Unfortunately, money and that funding is what makes this world go and helps us. I hate that it’s attached to money, but that knowledge of money is something that we don’t understand. The difference between credit and funding is such a profound thing. It can change people’s lives and help them live the life that they always want, whether it’s traveling, over on a mission, for your church, a dream you’ve always had on helping others with a business. You were able to have a fleet of trucks. I know you’ve helped truckers in your way to own their own rigs.
We’ve done so much together with your audience. I want to introduce you to her because Jennifer is a high-energy dynamic woman. She has her own SiriusXM satellite radio show for years. She’s invited me on there 2 to 3 times a year because we have so much in common. She wants to facilitate her listeners to not only improve their credit profile and their borrower status, but she focuses a great deal on real estate investors and help them take things to the next level. I am inspired by you. She’s also has a bestselling book, 101+ Resources for Veterans. She’s totally committed to the veteran experience and how to facilitate those amazing people who’ve done so much for us. Welcome, Jennifer, to our show. It’s funny we get to reverse roles because I’m always being interviewed and now, I got you.
We may do several of these but your last interview of me, you had introduced a gift that you’d been giving people who asked you where to send it. It was seventeen questions to ask a mortgage professional. COVID is upending a bunch of dynamics. There are a lot of things going on, yet we’ve had a huge amount of our clients who have taken down mortgages who’ve been able to qualify. As I like to teach, the target is getting smaller but if your fundability scatter chart is small, you’re going to be fundable no matter what. I wanted to go over these questions and let’s talk about them and how do we create a great relationship with a mortgage professional that can stand the test of time?
One of the biggest things for me as well as I’m always talking about you need to create your A-Team. I also call it your Yay-Team because I’m known for saying yay. I want to make sure that we’re always celebrating the yays that we have every day. They’re more than I think we realize and it’s become more evident that we’re seeing so much sadness, sickness, and death. It’s making it much more important to realize those yays. I always talk about building a team and you’re one of the people I think that everybody should have on their team because they need to understand. One of those people is your money person. It may be that you need a mortgage, so you need a money person in that, but you might also need funding for your business.
There are all sorts of people in there, including your credit expert and your funding expert, which is Merrill Chandler. When I was looking at COVID-19, I got started getting a bunch of these phone calls and I was on some other radio shows and people were saying, “I’m thinking about refinancing.” I thought, “Anytime you’re talking to a mortgage professional, you need to ask them certain questions.” When I was starting to interact with people, I realized, “They never even asked.”
People don’t know what to ask.
“If you don’t ask, you don’t get.” That’s Jack Canfield, Chicken Soup for the Soul. He’s also the author of The Success Principles. He always says, “Ask, ask, ask.” These seventeen questions grew out of that need to desperately want to help people no matter if you’re just looking to get a refinance or if you’re going to go buy a property. It could be a commercial property. These are specifically focused on residential properties. I know you said I’ve been in doing real estate as a licensed real estate agent for years, since 1997. In the Washington DC area, I’m licensed in three jurisdictions: Virginia, DC, and Maryland. I love helping people get the best deal on their mortgages. I’m not super popular with mortgage brokers. You should know that.
We want our audience to be able to say, “How do I find someone who’s going to serve my needs, and then we can build a relationship with them over the long haul? They first have to be somebody I want to work with.”
I’ve had some people do this and they literally emailed it over to their mortgage professionals. I was like, “That’s creative.” I recommend that you don’t email it to them. I recommend that you go through and you write the answers because you should have some back and forth with this. I will tell you that the mortgage professionals that have gotten a copy of this are not pleased with me at all. Talk about pulling back the curtain like the Wizard of Oz.
Take that as your first hint. This is not something you email and it needs to be conversational. When you ask a question, you make it sing-song. You’re like, “By the way, I wanted to know this too.” You make it conversational. You can’t read it or otherwise, someone’s going to be like, “I’m going to be hemmed in here,” and nobody likes to have that, especially how cool these questions are. I do want to tell everybody where to go so you can download your own copy of these questions. Go to JenniferJHammondLive.com. It talks about a free gift. This is that opt-in. Give her your email so she knows where to send this and you’re set and you’ll have your own copy of these.
I wanted to address Jack Canfield, “Ask, ask, ask.” At least I have ideas about where it springs from. You and I have talked about this several times, but many of us don’t believe we deserve something. We will answer a question for somebody by not asking. We’re telling ourselves no so that they don’t have to and we don’t have to feel rejected again. A perfect example in numerous times, in my bootcamp I talk about how individuals literally are broadcasting with the lender, “Don’t lend to me.” Tell me your thoughts on this whole deserving piece. This is a heart piece and I never want any of my episodes to just be the tech. Tell me your thoughts about that self-denial or the process of not asking.
I am happy that you brought that up because this is part of the reason that I realized that by having my questions in their hand, they feel like they’re leveraging me and my expertise. They don’t feel worthy to even ask these questions. I am going to continue to expand on these questions for people. I know you’ve seen this as well, but I can’t tell you how many times I’ve seen somebody who doesn’t feel worthy of $1 million line of credit or if they’re buying a house. I’ve seen plenty that are coming out and they’re buying their first multimillion-dollar house and still, they’ve made amazing success in their life. There’s something in our heart, in our mind, I also would say there’s a spiritual ridge there.
Everybody knows about my non-religious deeply spiritual convictions that there is something that vibrates us higher and higher or lower and lower.
I agree with you so much. It’s funny because I have that conversation with Jack Canfield about, I love it when you can find something that gives you, whether it’s music or whatever your grounding is. Right before you call a mortgage professional and have this, play your favorite song, get yourself pumped up, you need to hear the Rocky theme. Get Rocky playing in the background.
That’s why I love you is because you get it. We can move our energy such that we have a higher capacity to take the win. I did an episode called Take the Win where I had written my book. I finished my book and I literally sent it to the printer and then the next morning, I started on my next project. I didn’t even take a second to go, “I just finished my first book.” It didn’t take even a moment to take the win. Do you have any examples in your life where you avoid it? I want our people to know that they’re not alone. We’re all doing this in a way. Sometimes it short-changes us.
I would tell you one that I’ve never ever shared before and that you’re probably going to be surprised. I’m going to be vulnerable. I remember when they gave me the SiriusXM radio show, I thought, “That was a mistake. They don’t understand.” I’ve never done it before. Every single week I thought for sure there was going to be somebody who was going to call in and go, “She’s not professional. She hasn’t gone to whatever radio school.” I kept thinking, “They’re going to fire me.” I remember the last time I went in for contract negotiation with SiriusXM. I went in and my contract was about to expire.
Here I am years later going, “They were about to fire me. I think they’re going to fire me. Are they going to fire me?” This is going on in my head and all of a sudden they’re like, “We’d like to go ahead and give you a raise and we want to extend your contract to a longer contract.” I looked at them I had to turn so they didn’t see my eyes because I started to fill up with tears and I thought, “Are they really serious?” I’ve had some amazing stories of people not only from you, and that’s one of the reasons I bring you up is you’ve changed people’s lives. I have people who didn’t commit suicide because of something they learned on the show. That’s why like what you just said with our heart, we don’t feel good enough. We realize that we’re also preventing the world from seeing our light, vibrating at that high level, and sharing it because every single one of us has something to give and a beautiful gift to give. Just like these seventeen questions, I didn’t realize how powerful they were until I started seeing the feedback people coming back. I was like, “Those are good questions.”
They were powerful and thorough for me, it was so in their face that I’m like, “I haven’t had her on my show yet.” I’ve only been doing it for months, but I’m like, “Why isn’t Jennifer on my show?” Everybody needs to know these questions. Everybody on the planet needs to be able to ask a mortgage broker these questions. It triggered me to a whole new level. I’d always been the recipient of your generosity. You having me on your show and educating your people. Now, we get to flip that script. We get to turn it upside down and have you talking to my tribe because this thing is legit. I used to fly over the country going to different events or whatever and when you say, “Letting the light shine,” like The Good Book says, or at least vibrating at a higher level. When I’m flying in different parts of the country at night, you see one little light in this massive darkness. It could be cornfields in Kansas, you could still see the one light. The more lights that are glowing, pretty soon you can see they’re lighting up the skies from everybody. Every light counts and everybody has a message. Everybody has the right to ask somebody to give them a win and make it a win-win. Remember, doing a mortgage with somebody, they’re not going to not win. Do you get to win as well? I believe you deserve it. Jennifer definitely believes you deserve it.
That’s one of the first things is understanding, like you said, take the win. I’ve been doing a SiriusXM Radio for so long. People are learning things. Their lives are changing. It’s worth it. Take the win but make sure that you are also getting through whatever that spiritual ridge is. I don’t even know words to describe it other than it’s so easy for us to go. I know you shared a lot about your own childhood, but I had a rough childhood. I had a lot of people tell me I was stupid and I was never going to make it. They were many awful things that now when I think about it, I realized you have to have the Rocky theme that needs to go in your head.
Go for whatever inspires you and make sure that you have that attitude. You have many amazing things about working with credit card companies. When you are going to talk about money, money is something that for some reason, we have these scripts going in our head, “Money is evil.” No, it’s not all evil. If you’re too focused on it and you think about the things that have been said, “Money doesn’t grow on trees.” Maybe some of that stuff is just weird little things that are in your head and they don’t mean that you’re not worthy of an abundance of money. Every bit of money that’s out there, but you have to have that attitude. It’s an attitude of gratitude, but it’s also the ability to take that win. Because if you don’t, then as you’re going through these questions, I’ve also watched these seventeen questions, some people come back to me and they saved thousands of dollars. Other ones, they’ve saved a little bit here and there. Everybody has a win on it. The difference has so much to do with the attitude that you approach it.
How Much Skin Do They Have In The Game?
Let’s go through these and talk about each one of them. Question number one, how long have you been working in mortgages? Do you love it? Is it a passion for you to help people understand their options? Do you work alone or with a team? Tell me about that.
This question is very much about understanding the purpose behind that person. Is that person going to push you off on somebody else? Are they looking for you to do an online application in the least amount of interaction, the least amount of their time? You want to know how much skin do they have in the game. Are they interested in being an educator? Are they interested in, as I call it, to put you on the Yay-Team? Are they wanting to be on four financial teams to help you be better? You want to know what it is. One of the other things that I had somebody asked me is, “What should the answers be?”Most people would rather spend at least one night in jail or have a full root canal rather than go through a mortgage process. Click To Tweet
What Are The Different Mortgages You Offer?
We want them to be yay. Remember the movie, The Big Short, it talked about the people who got into mortgages because people were making $20,000, $30,000, $50,000 a month doing mortgages because it was just a mill. All those people got kicked out of the business or they fell off when times got hard because they’re not truly about the win for themselves and for their borrowers. It’s how long have you been working in mortgages, and what’s your motivation? Do you love it? Are you just trying to get an app filled out? What are the different mortgages that you offer? Programs, VA, FHA, conventional?
This one’s important because you need to know what they offer. A lot of times, people might know of one program. They might know of a VA and they think that only one lender does a veteran’s loan and all it is a government back loan like a VA and an FHA. There are some lenders that do what’s called a Portfolio Loan and this is a completely different kind of loan. You need to understand what that particular lender has available. For instance, if they have a toolbox, this is their toolbox. They have FHA, VA, they have all the different kinds, but if they don’t have the kind that you need, if you’re a veteran and you need a zero down loan and they don’t offer it, or quite frankly if they don’t know it well, we could do that.
If they don’t do that very often, you’re probably going to want to go to somebody. You might not even want to go to question number three. That’s part of what this is. This is a way to weed out the good versus the bad. We should probably start by always looking at least two lenders if not three lenders when you’re interviewing, whether it’s a refinance or whether you’re just getting your very first mortgage, it doesn’t matter. Even if you like the way that someone answers the questions. There’s so much you don’t know. It’s worth it interviewing.
We’re going to talk about how to protect your profile and still interview these people because you definitely want 2 to 3 people to interview them. You don’t want them pulling your profile yet, and there are a couple of things that we can add in here.
One thing that I didn’t put in here but it is important is knowing when they do certain loans, are they somebody who likes doing those loans, which is part of one too? You’re going to find somebody who’s a veteran, who loves doing veteran’s loans, or you might find somebody who they aren’t actual real estate investor. They love doing these different kinds of streamlines, 203(k)s or special ones with renovation cash in there. You need to know what is it that not only do they do, but what do they like doing?
Are There Specific Mortgages For Me?
Also, what are they proficient at? They like doing it so they become very proficient at it. Number three is, “Are there specific mortgages for me?” Go through that, Jennifer, because this is a big deal. Don’t ask the question, don’t get an answer.
This is important because you think about this with COVID-19. There are many amazing mortgages out there that are made specifically for firefighters, doctors, nurses, and the ambulance staff, all of these different ones. It’s important that you get that one because it will have some of the parameters. It’s important to know that they’re out there and that quite frankly, these are going to be things that are amazing to help you get into a position. These could be programs that are actually on your state level or even on your county level. There are programs that may be layered together, and that’s to get that specific mortgage. You need to know if that is a company that does that kind or if it’s just not possible. If they say they have no idea what you’re talking about for your mortgage loans, then you know that this isn’t somebody who cares or it’s somebody who’s doing like as many as possible.
This is especially important for first-time homebuyers. I had somebody who came through and she’s a Navy nurse. It was interesting because she was a first-time home buyer in Maryland. She wasn’t a first-time home buyer ever because she had bought something many years ago. The thing to understand is that first-time homebuyer programs are different depending on what states you’re in. They have amazing benefits. If you’re not looking for these specialized mortgage programs, you could miss thousands and thousands of dollars just in savings.
What Banks, Credit Unions, Or Financial Institutions Do You Offer Mortgages From?
Make sure that you review that they know who you are and what programs that the lender offerings are specifically suited for you at a federal, state, county, and by industry or by your employment type. Number four, what banks, credit unions or financial institutions do you offer mortgages from? These are the mortgage bankers and their programs.
This is an important question that people overlook all the time. When I talk to buyers, I always have a conversation. First of all, do you have a relationship? This could be that you’re with a particular relationship because you’re an attorney and you work for a law firm and the law firm has a relationship and that might be it. You might be with a teacher and they have a teacher’s credit union that has amazing mortgages. In the Washington DC area, we also have the “world bank” which they do offer mortgages for people.
The first time I ever had one of my clients and he was getting, and of course, the numbers are amazing because they do want the people that are coming from overseas to be able to own a place and not just rent. It’s a phenomenal program. If they didn’t know about that program or a federal employee, there are many amazing ones out there. It could be specialized being a credit union or bank and just like I know you teach, there are top-tier banks, local banks, credit unions, and all of these things have very different impacts for you in the future for buying others. If your dream has always been to be a real estate investor and you’re thinking, “How do I buy five more properties?” Who is that relationship going to be with it?
Relationship is everything. It starts at a credit card or a checking account and grows multiplexes being financed by the same outfit.
You said something that’s important. It’s also taken onto the dating element of it. Think about it, you’re not looking for a one night stand. You’re not looking for a one-time product of just being able to get one mortgage or one refinance. This should be an institution, whether it’s a credit union or what it is that you are actually creating a relationship with. This shouldn’t be somebody who cares about you.
Also, celebrate your wins with you, and you want to nurture and take care of that over the long haul. We need to do an episode just on the relationship metaphor. I need to do that and then we’ll translate it into an eBook on dating perfect lender because they’re exact parallels. If you’re a relationship builder, you can use those skills in banks. The other thing with banks and financial institutions, it’s like she’s saying. Make sure that you look at all the associations you’re a member of. United Plumbers Association, they may have a mortgage as part of either unions, associations, credit unions or veteran services. Find out who you are and see if they have things that are available for you.
It’s important to have relationships. I’m always talking about building a team. The relationship is key and you also need to know who you’re in a relationship with like your mama taught you. Those friends, they’re either good friends or they’re bad friends. I didn’t put this on the list, but one of the bonuses I would say is look up their credit ratings and see are these credit unions have a bunch of lawsuits against them? When times were tough, did they take care of their peeps? Did they take care of their people or do they not? That’s a COVID-19 bonus.
Which Type Of Mortgage/Refi/Equity Line Do You Recommend For Me?
That is a bonus question number eighteen. What’s their credit rating? How do they stack up and look at them? I love this one and I got some great questions for you. Number five, “Which type of mortgage/refi/equity or equity line HELOC do you recommend for me?” I’m going to throw this in here, especially for my tribe. If you have your myFICO credit report and you pull that, you have your mortgage credit scores. It’s not in the format that they know, but they are true legit mortgage credit scores. If you take those in and say, “Knowing nothing else but what’s on this profile, what can you do for me?”
This is important because I was doing this with a client. You want to make sure that you know what you have. It’s almost like having that confidence. This is a mind, heart and a spiritual thing of you’ve got to get through this ridge of you know that you are doing good. I don’t care if you have an 850. I don’t care what you think the number is. You need to have that Rocky theme or whatever theme going in your head because you are an asset to that. As you’re going forward with this, it’s important that you come and you figure out, you need to be able to look at a line of equity. I’ve had people think about this, whether they’re looking for some money for college tuition for their kids or they’re looking at doing repairs around their house. Is a refi going to be the best? You need somebody who’s going to tell you, “That’s going to extend out your payments for another ten years if you do this refinance.”
Look at what are all the fees and all the other things that are associates so that you need to put this on a spreadsheet. I know how much you love spreadsheets. You put it on a spreadsheet and look at a refinance, a line of equity and all the different ones that are here and which one’s better for you. I get this question all the time on the radio. I hate to throw up my hands and say, “It depends because it does depend.” The other secret sauce or the secret ingredient here is for you to have your own mortgage scores presented, email them over to them. These are real, these are not FAKOs.
One of the things that is fascinating to me is I want to ask you about these relatively new All-in-One lines. Talk to me about your thoughts about All-in-One HELOCs where they’re on the first position that used them as a sweep account. It has a checking account with it. Where are you on this?
It depends on what the other things is and how it’s going to impact you. Sometimes if it’s absorbing too much of your available credit, just like when you’re doing the spreadsheet. It’s absorbing too many of the tools in the toolbox. One time someone said to me, “Have you ever thought about shampoo and conditioner? They do two different things.” I understand the marketing side of that, but it’s the same thing with this, the all-in-one. You can’t be all things to all people. My opinion is you should be very careful about that. There are definitely situations where that would be a good thing, but for the most part, you want to be very cautious on that. I have found it’s not what it’s sold to be.
What Is The Current Interest Rate Available For Me For Each Different Type Of These Mortgages?
Number six, “What is the interest rate available for me and for each different type of this mortgage? The HELOC, the first, the second, that’s an installment loan. What’s the monthly payment for each?” I’ve used this a number of times for my tribe, but BankRate.com is a great place to go reality check what you’re asking your mortgage broker to do. Part of the reason why I love these questions, just like we do banks, we teach our tribe to vet lenders. Right here, you’re vetting a mortgage broker. One of the ways you test a mortgage broker is you do the math and then you send them to go do the math and then you reality check their numbers. What things that they’ve done added in or not that you didn’t add in? This is how you can reality check your things. What’s been your experience, Jen?
It’s important when you do this that you’re looking at it. If you look at my questions and I say, “What is the interest rate available?” I put in parentheses for me because I just had this happen with another one of my buyers where the interest rate that they were quoted, and then once we got into the deal, it was completely different. They were like, “I don’t understand.” I said, “It’s one of the questions. It’s why I put it on there is because what is the interest rate for you is different unfortunately.” That has to do with all sorts of other factors in there. You need to look at what that is and if there is, it’s a discrepancy even what they first told you to what they are telling you. You only have so many days to closing and now you’re stuck with this lender, “Sorry. That’s just what it is.”
A part of their game is to sew you up. Many of you may already know this, but here’s a simple and easy part. It’s not the whole part of what she’s referring to, but there’s what’s called the interest rate on the loan. Let’s call it 4%. There’s the effective APR, which bundles all of the fees and then divides it, and all of a sudden you get 4% and you’re excited about this loan. You take all of the fees over time that are being added on to the frontend and then they divide it out, then all of a sudden you’re at 4.65%. You’re like, “Where did this 0.65% come from?” Talk about that.Mortgage brokers are always going to win. Find ways to deal with them where you win as well. Click To Tweet
It’s interesting because when I say that you’re looking even the question before like, “Is a refinance better than just getting a line of equity or the different things?” If you’re refinancing, are you actually looking at the whole thing? Often, the lenders have said, “Here’s the shiny penny, it’s the interest rate.” Yet, it’s all the other things that they’re doing. It’s almost like that. To me, it reminds me of a bully at school who’s patting you on the back. You think everything’s great and yet, what they did is they stuck a ‘kick me’ sticker on my back. It’s not fair, and yet you’re the sucker and then you’re halfway down. That’s why I suggest that you ask these seventeen questions of a mortgage professional beforehand because you’re going to get to know, even if you don’t understand what. Some people say they don’t understand what the answer should be. You should get a gut feeling on whether this person is willing to help you understand what you don’t know. You have the skill, the guy who gets to learn to be a fisherman rather than handing them a fish.
How Are All The Fees Associated With Each Mortgage Option?
That’s a great point that you may not know what the right answers are, but you will be able to find out their willingness to teach you of what it should be. Number 6 and number 7 questions go together, “What’s the current interest rate available for me?” Number seven was, “How are all the fees associated with each mortgage option?” There are insurances, discount points, originations and credit reports. That’s what we were talking about the 4% but you add all these fees on top of it, it can be a significant interest rate over time.
One of the reasons that I broke these out into two different ones is specifically because it still amazes me how often somebody doesn’t know what PMI, Private Mortgage Insurance is and how that’s going to factor in. The fact that you can get private mortgage insurance pulled off of your mortgage without having to do an entire refinance, which is another whole thing. We should do an entire show on that because it’s amazing how simple it is to get that done because it’s a federal law. The mortgage companies do not want you to know this information because they’re going to lose money on it. I hate that’s true. It’s been my experience and I’ve seen it from my own clients. I always want to hug them and keep them safe but unfortunately, it’s like, “Go swim with the sharks and it’s going to be fine.”
You’ve been to my bootcamp a couple of times where I talk about how auto dealers play the spread. PMI is the equivalent of how auto dealers shop your file, pick the lowest and say that’s approved at the lowest interest rate and then keep the difference. They’re trying to make more money in an unleveled playing field. Our whole point here is fundability means learning what you need to know and that’s why I’m so happy that you’re here answering these questions. These are the very things that are going to reveal whether or not a broker is truly taking advantage of us. Especially if you walk in there strong, you can actually negotiate a fair profit for the mortgage broker and come out of there with a win for both.
What you just said is important because both an auto as well as a mortgage, you have the power depending on how much knowledge you have. I was in my twenties and I was excited because I had finally made enough money where I could buy a Mercedes. I love Mercedes but that’s the very first salesman that I dealt with. I even brought a friend of mine who was also a real estate person. They took advantage of me in such a huge way. It was horrible and I ended up signing all the documents and I accepted it, and I felt like I had to take it. Part of it is that whole thing of me not feeling good enough and to have the confidence to stand up for myself. What ended up happening is in the Virginia area, after a couple of days, you can actually return it.
I went to another Mercedes dealership and I showed him all my stuff. The good news was he was a friend of one of my uncles. He sat down with me and he said, “Jennifer, you’ve been very taken advantage of. I would like to make this good.” They returned that Mercedes to that other Mercedes dealership and they gave me the exact same car but the financing was without all those hidden fees and all that stuff, which is the same thing with the mortgage company. The concept that I don’t want to go away without saying is that the one thing if you take nothing away from these stories is the fact that person in the auto dealership, the same way that a mortgage professional, know that they have all sorts of hidden ways that they can make money. That’s different like a licensed real estate agent or other factors you’re going to be impacted with in any kind of business. Know that the money people, it’s just the way the game has been rigged. It’s been rigged that way for a very long time. If you don’t know, you are in for it because they are going to take advantage of you.
The reason that question seven is important is because people will come back to me and they’ll say, “Why does it cost $80 for a credit report?” Those are questions that if you asked upfront, you’ve got answers and you know that your credit report with most of them is $20 or $30. Why are they charging you three times that? They knew they could take advantage of you and that’s why it gets me so mad that it still happens. You think that it’s not happening. I cringe every time I hear the word, predatory lenders. There are still lawsuits about predatory lenders. They seem like they’re being so friendly and fair with this whole COVID-19. You need to know these questions because if you don’t, you’re not going to be able to know if you’ve got a good deal.
What Fees Can Be Lowered Or Waived?
You’ll be paying for your ignorance. The average mortgage refi is anywhere at least five years. If you’re holding it forever, that’s expensive. If you’re flipping it or doing a refi or something within five years, you’re still paying 85% interest in those first five years relative to what percentage of your payment is actually going to interest. I’ve been working with the same mortgage professional for years for every loan I’ve done. I did my version of this a long time ago. We’ve become friends. My personal home, my investment properties, we went through 2008 together. It’s a free for all. She’s an awesome broker. One of the things that I learned that she told me was that at that time, the mortgage credit reports cost them $15. I’d be $20 now. Anything above that make a little profit, but choose your battles. Ask your mortgage professional to choose their profit area. They don’t get a profit on everything. We go into number eight, what fees can be lowered or waived?
This is important specifically because we talked about the credit report, but also there are discount fees, origination fees, there are all sorts of fees. You have to separate these fees out too. I lumped a whole bunch together partly because I did this for everybody in the United States and it’s different. You need to understand there are closing fees with the bank and the bank has control over. Some things are actually with the lawyer or the title company or whatever that is in your area, but some of them are the county or city and they’re fixed. You need to understand those. I went through closing with somebody and I was shocked by him asking me very specific questions about things that there was nothing we could do. They’re literally the DC fees. We have nothing to do with them. We had gone through this and I realized he still doesn’t understand. This is a key part of all of these. If somebody gives you an answer and you nod your head and you don’t understand, that’s not okay.
It’s not on them, it’s on you if you are not willing to go, “I’m not quite there yet. Can we go over this again?” That’s where you get to stand.
You’ll have to take that on as your own responsibility. That’s another one that I love Jack Canfield talks about. If you want to be successful, you have to take 100% responsibility, especially in things like that. Even for me as a real estate agent with that example, I was giving, I thought he understood. I didn’t have a clue he didn’t understand. At settlement, he’s freaked out as he’s looking at these numbers and I’m like, “We’ve gone over these numbers.” He’s like, “I don’t understand why are the county and the city asking for it?” You have to be brave enough to say, “I don’t understand,” and ask for another example. Keep on going through that. I don’t care if you have to ask it seven times. That’s why you’re looking for a relationship with somebody because they’re not going to make you feel stupid for asking the question. It’s important that you continue to keep asking the questions until you understand. If you don’t understand, you’re not going to be able to go into action and make good decisions. You’re going to continue to make bad decisions and we don’t want that.
What Is Your Process?
It’s going to cost you not just in this loan, but you’ll be afraid next time because some of us, we don’t learn the lesson when we trip and fall on our face, which goes to number nine. “What is your process? How long does it take? What documents are required? Is it done on a secure portal? What about fraud? What systems do you have in place to protect my personal financial information?”
I love this one because the process is different. This is a perfect time to bring this one up is because, with COVID-19, these processes are very different depending on what’s happening in your jurisdiction. They can be impacted by the COVID-19 whatever things are happening. You need to make sure that you know their process. Because just like anything else, you want to set your own expectations if you thought it was going to be done in two weeks and it’s not done. The other thing is you’re asking them to be able to communicate with you. Often I’ve seen with lenders, they don’t say, “If you don’t get me that particular document, then this process is going to be extended.” They’re telling me and complaining about the buyer.
“Why haven’t we closed yet?”
The buyer’s upset because now they have to pay more money to reschedule their move and there are all these other consequences. They didn’t understand the process. If they don’t get the documents and if it doesn’t go to underwriting and we get it back from underwriting with whatever questions it is, what’s the process? Also in this question, when you’re looking at what’s the process, is this a small regional bank where underwriting is “in the house?” Is it someone where they can walk into their office and they can say, “What’s wrong with the file?” You’ve talked about this with credit cards as well. You’re on the East Coast and the underwriting is on the West Coast, it’s over in California. They’re trying to get back and forth. There are different time zones. You need to understand what is this process and specifically how is it going to impact you and the rest of the process around. Even if it’s a refinance, if you’re waiting to cash out money from that or whatnot, you need to understand what is that process because it’s a monkey wrench. It’s a landmine waiting to explode and not in a good way.
For all my bootcampers out there, you have seen where I go through. You need twenty points to get approved. That’s how underwriting works and how they want you to not have double-A or triple-A paper. This is important to understand what that process is so that you can shorten, and nothing’s more aggravating than being told to cut. It takes 30 days and it’s 90 days until you close. You’ve got to frame these questions in a way that holds your mortgage professional’s feet to the fire. Some of us literally feel like we just crossed a 100-mile desert without water by the time we get our mortgage complete. That’s not fun.
There are some statistics that say that most people would rather spend at least one night in jail or have a full root canal rather than go through a mortgage process.
How Long Will It Take For A Particular Mortgage Refi To Be Fully Approved?
Number ten, “How long will it take for this particular mortgage refi to be fully approved? How long will it take to get closing?” This goes back to what you were saying, where are your underwriters? Down the hall or literally across country that you have to coordinate all this.
Also, the other part here is there are two things that we didn’t talk about in the last one. Number one, fraud, which is happening a lot. You need to understand what are they doing in their process to protect you from fraud. Number two in this question, the other thing that’s important is understanding the in-house versus somewhere else. Is it the outhouse or is it the in-house? Who is responsible? Is it a robot? “I desperately want to talk to a human.” Unfortunately in this process, it’s important. The other thing though in COVID-19, here’s a secret question that is hidden in this that’s happened to me already twice with closings in the middle of this COVID thing is that they said, “Everything’s approved. We’re going to closing, everything’s fine,” but it didn’t get funded. I was like, “We settled, everybody signed, they traded keys and still, that loan was not funded?”
What Is The Home Loan?
Remember, closing is not funding. As she said, closing is where everybody signed the docs and everybody has affirmed that this deal works for everybody and everybody has signed it. Let’s add this to our little list of what is the promissory note versus the mortgage. Funding means you’ve engaged the loan, but no one has actually transferred the money to the seller. That’s what they call funding.Ask your mortgage broker questions. You may not always get good answers, but you’ll always be able to gauge their willingness to help you. Click To Tweet
A part of the process of this question is you have to understand that sending the money is not the same as money arriving at the attorney’s office and funding so that it goes to the seller. It has to arrive. All of these banks have different things. I’ve seen one where it’s seven business days on a wire. We all know that wire is instantaneous. This is not like dial-up internet where the money is arriving. This is critical and it can stop everything.
During COVID, I did an episode where I talked about mortgage servicing and how the lenders are preparing for moratoriums. There’s phase one moratorium of six months and they’re preparing for a phase two of six-month moratoriums. Some of the new loans like Wells Fargo, there was a New York Times article saying Wells Fargo has taken fundings off the table not for first but for HELOCs and seconds because those are riskier loans. If you have to get foreclosed on the second position HELOC or loan, it is more difficult to get back, especially if there’s a downturn in the values of homes. They said, “We’re out,” but they’re still doing first as I understand. You know something more than I do because you’re dialed in on a daily basis with this.
It’s funny because it changes. We had somebody speak on Wells Fargo and it’s interesting because they’re like, “We’re still doing portfolio loans.” This goes back to an earlier question of the different kinds of types of loans that they’re running, and it depends on how much money you have with them because they also are one of the banks that looks for relationship. Their idea of a relationship is all about money, “What kind of money do you have with me? How much money do you have with me? Then I’ll loan you some money.” It’s like Oprah Winfrey saying, she desperately wanted amazing clothes and whatnot. She didn’t have a lot of money. It was hard to get it. Now that she has this unlimited amount of money, everybody’s throwing free clothes at her. It’s the same thing with funding in that these relationships, especially with a Wells Fargo, they’re looking for, “If you’ve got a whole bunch of money with me, we’d be interested in talking to you.”
Is There A Software That Helps Indicate What I Can Do To Improve My Credit Score And How Will It Change My Mortgage Terms?
I know there is a software that helps indicate what I can do to improve my credit score and how it will change my mortgage terms, including the interest rate and fees. Do you have the ability to share this information with me?
I’ve had a lot of different lenders tell me that they have this amazing software and it’s proprietary to the lenders. What they can do is they can say, “If you go to your discover card and you pay $5,000 and then you pay $2,000 on Victoria Secret’s cards,” they can tell you. They have these amazing modules of being able to go, “If you do this and you do this,” but be careful because you also need to look at your big picture on what they’re doing. I have had many lenders told me to do blah, blah, blah because of this software. It didn’t work out so great for me in the long run. Even to the point though of them not getting the loan that they were promised.
This is called Rapid Rescore software. It happens in a couple of different ways. It’s a temporary version of software. They can say, just like Jennifer’s describing, “Pay this down.” What if this collection got paid off? What if this thing were true or not true? They can run scenarios. For all my tribe and for yours, Jennifer, if you subscribe to myFICO.com, you have a very powerful version of that same software. They run scenarios about what your score would look like if you did certain things because FICO is the one who gives it to the lenders. This insider secret that they have, you also have access. I’m telling you to make sure you take in your myFICO mortgage scores, but you can also show scenarios of what to do, pay downs, closure of accounts, opening up accounts, other things that will benefit. You can show that score, verify and find out what the lender would recommend for you to do as well.
It’s a balancing act and it’s important. These seventeen questions are scraping the surface. Your bootcamp is so much fun. I keep seeing twice now and it’s so much fun because it’s always different. I also realize that you have to realize it’s a little art, a little science.
What Could I Do To Get Better?
It is art and science. It is about the flourish here and the raw data here, which leads us into question number thirteen, “What could I do to get better?” This scenario software called Rapid Rescore at myFICO, use it with your mortgage professional. They will know what you’re talking about. The question is, “What can I do to get a better interest rate, terms or fees, and closing costs? What do I need to do? What is double-A and triple-A? What are the things that I could do to make this work better for you to make a profit and me to save as much as possible?”
It’s a win-win scenario, but one of the things that you said that’s important is asking that question is even just like docking, “I know about this software you have.” I’m doing my side and I know it’s like knowing your score. I know what my score is. I know what hasn’t been removed. Hopefully, you’re doing what Merrill has taught you and you’re actually getting your name right and getting all your other stuff, so when you’re talking to this lender and you’re having this conversation, especially with this question, “How can I get a better interest rate?” You need to make sure that when you’re looking at the thing that most people look at, and a lot of times people are only looking at the interest rate and they’re not realizing, “The interest rate went down, but my fees went up.” You said it, “Where are they getting paid?” They’re not doing this for free. You’re not looking for charity when you’re looking for a mortgage, but you are looking to not be taken advantage of. This should be a relationship. This is not a one-night stand. This is one where you become friends. This is somebody like you said, you went through the hard times with.
Is There A Penalty On This Mortgage?
I met her in the run-up, 2005, 2006, 2007 and it was free for all. We had eight properties and a couple of million-dollar-plus properties. I took the roller coaster ride on the way down. I don’t know if any of you have been to Las Vegas, there’s this ride where you start out close to the space needle, and then it literally goes out over nothing and then dips down like you’re falling. 2008 for me in real estate was like dipping down but not coming to the block, me and my partner. You’ve got to know what you’re up against. You’ve got to know what you can do to do better, get the best possible things so that you can weather any times that are coming up. Number fourteen is important, “Is there a pre-payment penalty on this mortgage?” 2008 was the sad tale that I went through. Tell our audience what that is and we will talk about it.
This is why I put it on the list is because it’s not as common as it used to be, but it is still a question where every so often I’ll be sitting at a settlement like, “You’re on pre-payment penalty?” What it is saying is if you pay this off early, you’re going to be penalized and this could be a huge penalty. In the same vein, I went to settlement on a VA loan and it was also called Assumable. Those are two words that you need to understand. I don’t even think I put assumable on my seventeen questions. It goes into the same thing of knowing what you can and cannot do because most of us are not going to stay in that one house. When you’re going into it, know what it is like getting out of it and getting out of it before the full-term ends. That’s part of the pre-payment penalty. This could be a huge amount of money if you have a pre-payment penalty. Make sure you know what you’re getting into.
When Can I Lock In My Interest And Is There A Free Float Down On Interest Rate?
That’s a brilliant way to say it because the pre-payment penalty might be two years, it could be three years. You have to keep this for a minimum of X because they’re selling it onto the secondary markets and they’re guaranteeing a return for X period of time, 1, 2, 3 years. They want you to pay that payment faithfully, so they can pay the investors who bought your home loan. Ask about pre-payment. A great way to rephrase that is, “What does it take to get out of this? Are there any reasons why I can’t get out of this assumable prepayment?” Number fifteen, “When can I lock in my interest? Is there a free float down on interest rate?”
Some people don’t know this, Merrill. I can’t believe how many people called me and said, “I’ve got the interest locked in and now it’s a whole percentage point less. I can’t get them to lower the interest.” I was like, “Why not?” They come up with, “We want some additional fees to lower it.” I’m like, “What?” I realized that this is another way that the mortgage companies are making money on you. There are some chosen words I could use.
That’s bad Juju.
Why would you do that to somebody? You’re locking them in for this long amount of time and you won’t give them a free float down. I put it in my questions to make sure you have a free float down in whatever mortgage you’re getting. Lock-in is important. If you have a 30-day closing or you might have one that’s a 90-day. Especially now sometimes people are doing longer closings or if you’re doing new construction. If you decide and the alarm bells go off when I think about somebody who walks into a new construction place and uses the financing people that they have there. That makes me think, “What are you thinking? Why are you doing this?” That’s partly because these kinds of things they could in there all the time. A lot of times, they won’t even have an appraisal contingency. If it doesn’t appraise, you need to come up with that additional cast. There are all sorts of things. I need to know a whole one on new construction financing because it’s totally different.
Are There Any Programs To Help Pay For My Closing Costs?
Bring your own money to the deal. It’s like going to a dealership to buy a car, not knowing the game, then relying on their financing and they take advantage. Buying a new construction home and using the builders’ financing is a guaranteed loss. Unless you have the ability to bring your own money or know these questions to ask and negotiate a better with that lender. I did want to define what she means by a free float down is you can lock in your interest rate. If the interest rate goes up, you get to keep it for the entire term. If the interest rate goes down, you get to float back down and claim the new interest rate as part of your term before the closing. Number sixteen, “Are there any programs to help pay for my closing costs like bank programs, grants, local governments, nonprofits?” This goes back to the new buyer programs. Many times, new buyer programs can at least either help with costs or make sure that they’re minimized.
This is amazing because like in Washington DC, we have a lot of programs that will pay for all your closing costs. These programs are different because some of them are a grant where they just give you the money. This is another one that’s amazing because, as we all know, cash is king. One of the most fascinating ones is they give you the money for all your closing costs and you do not have to pay it until you sell the property.Ask questions. You only have as much power as the knowledge you have. Click To Tweet
You pay it with your appreciation.
When the price of the house goes up and it’s worth more and now you’re going to sell it and you’re making a profit, that’s when you have to pay it. Not even any payments on that. It’s a great program. There are programs all over Virginia, DC, and Maryland like that. One of the neat things I love to do with first-time homebuyers is go ahead and find a grant for their down payment and then find some program like this where they don’t even have to pay their closing costs until they go to sell the property. Now they’re getting into this for no cash out of pocket. That’s part of the reason that a lot of times these programs are a pain. They are processed, they take time. Sometimes I’ll tease you like if it’s a nonprofit or even a government agency, and they’ve got stacks and stacks of all these applications, then you should be the one who brings them cookies and you should be the one that brings them flowers. You should be the one that is not the complainer.
Can I Get The Discounted Reissue Rate On Title Insurance?
It’s weird how we keep coming back to that. You’re going to build a relationship with a lender or the grant people. Number seventeen, “Can I get the discounted reissue rate on title insurance?” Teach us about that.
This is a huge one. It’s funny because often people don’t know about this one. This is a secret that I learned early on. Title insurance is something that usually your attorney and your title company are who’s going to issue this. However, there is an interplay between your mortgage company. It’s part of your funding, but they make 50% to 75% profit. I know they’re going to cringe talking about uncovering this. This is a huge amount of profit. In other words, if there’s a recent title search that’s been done on the property, they can have what’s called a reissue rate, which gives them a discount on insuring your property with title insurance. I’ve done the entire hour shows on title insurance. If you don’t know what title insurance is, you need to understand that because it protects your ownership and your rights in that without other people being able to come to take a claim on it. You can lose your entire property without title insurance. The lender requires their insurance, but the owner’s title insurance is one of the most amazing places where you can save an incredible amount of money but protect you in a way that literally could save you millions of dollars down the road.
It’s a good homeowner’s discount. Instead of waiting to prove to them that all this is solid and that you get a discount when they re-up the insurance, you’re getting that discount rate from the beginning.
It’s a little bit different because what happened is that it has to be done somewhat recently. For most of the things, it has to be done in the last few years. If the property has been in the last few years that was owned by one person, and then they can bring the title insurance. Meaning that there’s another company that insured it and said, “There are no clouds on this title,” and what they’re doing is you’re saving the lawyers, the title work on having to do that. They’ll do a certain amount again and in a new unit of time just to make sure, but because it’s already been insured and because it wasn’t very long, they’re very specific parameters that attorney has. It’s a little bit different, but it is because there are no other clouds on that title. You’re saving the attorney’s fees on it, so they will reissue it.
Unless you know about it, they will not give that away because this is a huge amount of extra income that a law firm gets, specifically in the DC area. I know it well. Title insurance though is all across the United States. There are two different kinds. If you don’t understand that, I could do an entire seventeen questions on title insurance because there are owners and there are lenders. You need to understand that the owners are not always required, but lenders are required if you’re getting a mortgage. Owners are very important. If you’re paying cash for a house and you’re not getting some kind of title insurance, you’re putting yourself in danger. It’s a huge amount of money.
Especially for cash buyers, real estate investors who are looking to turn their property over and be able to do this. Readers, is she genius or what? This is why I love this woman. Her expertise is beyond compare. Thank you, Jennifer, for joining us. Tell us how to find you on the radio.
If they go to the SiriusXM app, they just search, Jennifer Hammond. You can also go to SiriusXM.com/ondemand and you can find Jennifer Hammond. If you have Sirius XM, then you just look for me on the Urban View. I’m on channel 126. I’m on Saturday’s live. It’s 7:00 to 9:00 for two hours on Saturday morning, and then it replays from 2:00 to 4:00 Eastern, and then on-demand on the SiriusXM app.
8:00 AM is when I’m usually on her show and that’s 6:00 AM in Salt Lake. It’s always so much fun.
I always love the fact you’re waking up and I keep asking you more questions and you’re like, “Why are you so excited this early in the morning?”
You’re going to go to JenniferJHammondLive.com and tell her where to send the questions. It says free gift on the page. Jennifer, this is pure genius. Thank you so much for speaking with me and educating my crew, my tribe on things that I know how to do many of these on my own, but I’ve never taught my crew because usually, we don’t get this in-depth. This gives me an opportunity to train my team to help our clients at least know how to promote a better awareness inside of their mortgages. Any final words? Anything you’d like to tell my crew?
I just want to say thank you so much and remember that all of this like Merrill says all the time, the most important part is remember at heart, you are good enough. You are worthy of millions and millions of dollars. You are worthy to step into your life and know that you can learn any of this no matter if it sounded confusing. We can always find a way that you can learn this and apply this and have an abundance in love in your life. I hope that you will always spread smiles no matter where you go. I thank you so much, Merrill, for all that you do.
Thank you so much. It has been my pleasure to have Jennifer Hammond with us. Jennifer, you are a jewel. Godspeed, God bless you on your way. We will be doing this again. Thank you.
- Jennifer Hammond
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About Jennifer Hammond
Jennifer Hammond is a high energy dynamic woman who not only serves as a real estate executive; but also as a SiriusXM satellite radio talk show host, a best-selling author, and is a member of The Happiness Hall of Fame!
As a Vice President of TTR Sotheby’s – one of the country’s leading real estate companies located in Washington DC – she has helped hundreds of clients attain their dreams owning real estate for over 23 years and she has helped make the world a better place by educating, inspiring and empowering people by hosting The Jennifer Hammond Show on SiriusXM for over 10 years, and has aided thousands of veterans and their families in finding the help they need through her best-selling book “101+ Resources for Veterans”
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