Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
Long before there was a “Keeping up with the Kardashians, Americans were focused on “Keeping up with the Joneses.” For those who don’t know, ‘Keeping up with the Joneses’ is an expression that refers to the comparison to one’s neighbor as a benchmark for social class or the accumulation of material goods. According to Wikipedia, the phrase originates with the comic strip Keeping Up with the Joneses, created by Arthur R. “Pop” Momand in 1913. I assure you that the concept originated well before that, and can likely be traced back as early as the Book of Genesis, with Cain and Abel, if not earlier.
When it comes to the recent “dip” in mortgage rates, I am finding a funny comparison and competition occurring in the marketplace. As most of my business comes from word of mouth referrals from current or past satisfied clients, I find that they are often pointing at the rate that their friend received and expecting to get the same or better. When I offer someone a low rate with limited or no fees, moments later, I get a phone call or email asking for “the same deal.”
Firstly, I greatly appreciate the referrals and introductions – it is the driving force of my business and keeps me motivated to exceed the expectations of my clients. That said, I always encourage people to explore and discover what is being offered in the “real” market (i.e., from friends and relatives, as opposed to the media and national averages), as I think it’s a healthy exercise. At the same time, however, when it comes to the particulars of what one homeowner might get as opposed to their neighbor, the range is enormous. Many variables go into consideration when someone is getting accurately quoted a rate for their specific circumstances.
Don’t get me wrong; there are still banks out there that put all of their clients into a “box,” They maintain a one-size-fits-all approach. For all those that meet the rigorous parameters of their guidelines and demands, you will get the universal rate that they offer to everyone. That might work out very well if the prices are “below market,” and a client has issues that would otherwise not yield the same terms elsewhere. Alternatively, if someone has superior qualifications or other compensating factors, that might not be “rewarded” if the bank has a uniform rate for all its applicants.
It is because of these (and so many other) inefficiencies in the banking environment that lenders such as Approved Funding have found a successful niche in the marketplace. We reward those that should have enhanced pricing, and we fine-tune carve-outs for those that might have blemishes that might otherwise render them ineligible at a bank.
Even if a person feels that they are more qualified than their friend, there might be other variables, such as the property type, that might lead to a higher or lower rate compared to someone else. For example, I had a client who called me this week, who was upset with the loan officer that he was working with because he was being quoted a rate that was higher than his colleague – who he “knows for sure is making less money than him and has worse credit.”
After a few minutes of conversing, I told him that because he lives in a condo, the terms will be slightly higher than those who live in a single-family home. That said, because of our consultative approach, I was able to tell him that if he puts down an additional 5% of a downpayment, he would be able to get a mortgage rate even better than “Mr. Jones” did! I have countless examples of how situations like this occur, and we can distinguish ourselves with more favorable terms and conditions simply because of our lending approach and business model.
Whatever the catalyst, there are positives to the notion of competition and using “neighbors” as a benchmark to push someone to achieve something that their “friend” has also done. When it comes to getting the same rate as your neighbor, my advice is simply to use that as a guide, but focus more on your own situation and highlight those advantages – to someone that cares. That someone is me!
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