Auto industry woes, high unemployment, steep business taxes, and the Detroit Lions are not the only curses we have to deal with in Michigan.
We must also endure the unending pitches from the "mortgage experts" at Rock Financial (suggested tag line "a quickie loan company") and other lenders like American Equity Mortgage (suggested tag line "your home will belong to us") and Patriot Financial USA (suggested tag line "you don't even need a home to get a loan").
Talk about a tough place to live!
Blaring over the radio are Rock Financial's incessant commercials extolling the virtues of their "exclusive" mortgage programs to satisfy your every need. After all, they are the "mortgage experts" and "Michigan's largest" lender.
How can you go wrong with this poster child of the refi boom?
The key mistake in dealing with a mortgage mill like Rock Financial is believing that mortgage advice is neutral and that the mortgage company has your best interests at heart. Don't bank on it.
Mortgage mills have one basic goal and that is to keep you on a continual cycle of refinancing your mortgage over and over and over. That's because mortgage mills are transaction-based businesses that are geared toward making a lot of money on each closing. They don't care about you as much as they do about the transaction. Their "advice" about how to handle your mortgage is driven by their dependence on creating transactions.
At times it can lead to some idiotic recommendations.
For example, when interest rates were at their lowest point in several generations (June 2003), these folks were extolling the virtues of adjustable rate mortgages (ARMs) for the masses rather than locking in great long-term fixed rate deals. Thus, the mortgage industry saw unprecedented growth in ARMs.
(Note, there were legitimate situations and borrowers for whom ARMs did make sense in that time period, but not to the extent they were pushed upon the public. Instead, ARMs became the loan du jour for people who could not otherwise afford the steep payments of a more sensible mortgage product.)
The problem, of course, is that when interest rates are low they have only one direction to go -- up! (Gee, what a surprise.) Guess who's stuck as those interest rates rise? The hapless borrowers watching their payments go up. Or maybe not.
Fear not borrowers, the mortgage experts are coming to the rescue -- again!
Now that short-term interest rates have risen dramatically, and long-term rates to a lesser extent, the mortgage experts are falling all over themselves to recommend converting those ARMs that were such a great deal 6 months ago to fixed rate loans "before it's too late." More transactions. Cha-ching!
They are yo-yoing borrowers up and down by making recommendations that run counter to sound financial decision-making.
Call me old-fashioned, but I thought the ideal strategy with any investment is to buy low and sell high. The parallel on the borrowing side is to lock in long-term fixed rates when they are low (and expected to rise) or go with short-term floating rates when they are high (and expected to fall).
Oh, silly me, I couldn't run a very good mortgage mill with such advice.
The good news is there are many solid lenders and dedicated loan officers out there who do take excellent care of their clients. However, you generally won't find them drowning us with their hype over the radio or TV, blabbing on their own talk shows, affixing their names to large commercial properties, or buying professional sports teams. It takes a lot of money to burn to do those things and that money comes from their customers' pockets. Better to keep that money in yours and out of theirs.
Instead, you'll find good mortgage lenders and loan officers quietly going about their business taking care of clients.
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