How to Sabotage Your Mortgage Broker — Right from the Start
In this article we will tell the story of Ross and Rachel (fictitious names), a successful couple from the high-tech industry with a combined net monthly income of 35,000 NIS. They purchased an investment property in the Gush Dan area, were classified as VIP clients at their bank, and hired Finwiz's advisory services.
So far everything sounds great. But they made one critical mistake.
What was the mistake?
They went to their bank branch and requested a principle approval — before consulting with us.
The bank promised them exceptional service as VIP clients, and they believed it. In practice, they "locked" their file at a specific branch with a specific clerk.
Why is this a problem?
When a mortgage file is opened at a specific branch, the process is usually "locked" there. This means it is not possible to transfer the file to a different branch or a different clerk.
In Ross and Rachel's case, the clerk who received the file was:
- Didn't respond to emails
- Didn't return phone messages
- Wasn't moving the paperwork forward
During this time, other banks submitted competitive offers, but their bank stayed silent. The negotiation deadline was approaching with no serious offer in sight.
Why does this harm the negotiation?
A mortgage broker's ability to secure good interest rates depends on two things:
- Relationships with mortgage bankers: a good broker knows the best and fastest clerks at every bank
- Competition: the ability to bring competing offers and apply pressure on the banks
When you "lock" yourself into a specific branch before the broker enters the picture, you strip them of both of these tools.
What not to do
- Approaching banks directly before hiring a broker
- Requesting a principle approval at physical branches (this "locks" the file)
What to do instead
Summary
Once you have hired a mortgage broker — let them do the work.
The broker knows which mortgage bankers to work with, how to build the file, and how to negotiate effectively. When you approach the bank on your own, you miss out on the added value they can bring.
Once the file is locked at the wrong branch, it's very hard to undo. It's far better to head the problem off up front than to try to fix it after the fact.