I was speaking to a friend over the weekend – she and her husband have been thinking of refinancing their existing home mortgage and they have been shopping around the web doing a research.

Their situation is not uncommon - many homeowners today do their home financing research on the internet. My friends asked that I not use their names, so let’s call them Harriet and Henry Homeowner to protect their privacy.

Harriet and Henry have owned their home for five years. When they purchased the home it was their first, and the realtor introduced them to the broker who provided the financing. They were confused by many of the forms sent to them during the application process, and were constantly told, “Don’t worry. Let us take care of the details. You have to get ready to move and that part of the purchase process is our job – relax!” NO ONE ASKED ABOUT THEIR PLANS OR FINANCIAL EXPECTATIONS, AND NO ONCE CARED ABOUT ANYTHING EXCEPT THEIR COMMISSION.

It turned out that all the relaxing resulted in shock therapy at the closing table. The closing costs, finally spelled out in agonizing detail the day before the closing, were almost 20% higher than Henry and Harriet expected them to be. To make matters worse, the margin on their hybrid adjustable rate mortgage loan was higher than they expected. Faced with no place to live as of the following Monday, and overwhelmed by the excitement of owning their first home, the Homeowner family went peacefully through the process as many first time homebuyers do.

With the fixed period of their hybrid adjustable about to expire in four months, Harriet and Henry decided that now is the time to refinance. They also plan to take about $75,000 of their equity out of their home to dormer the second floor of their home to make more room for their growing family. Having been rushed and hustled through the process the first time, this time they have vowed to think of and demand answers to ALL of their questions before they commit to a lender or a program. They are doing things the right way this time, but they are having some interesting experiences I wanted to share.

Harriet and Henry entered their information on a web site promising to have four lenders contact them with hours with offers specifically tailored to their needs. One form – one click – and suddenly the whole financial world was going to compete for their loan.

The first call came the next day. The loan officer was not interested in listening to what the Homeowners had to say about their plan for this new loan. All he wanted them to do was “Trust me – I AM a professional and MY expertise is all that you need to know. I will TELL you the best program and structure for your new loan!” After five minutes of this high pressure nonsense, my friends politely said good bye and chalked it up to the learning process. They wisely decided that anyone who was not interested in their needs and goals was not going to get their business!

The second call came that evening. This lender’s representative only wanted to push his company’s hottest product – a six month arm loan that was interest only for the first five years that came with a three year prepayment penalty as a bonus of dubious value. While he offered to send out paperwork immediately to them, he became hard of hearing when asked about other mortgage programs and products. They hung up on him with a curt request to please lose their phone number and never call back. Five minutes later a supervisor from this same national lender was on the phone, trying a more sophisticated and high level form of high pressure sale. The supervisor answered none of their questions as he tried to force them to say yes.

The third lender’s loan officer left a wrong number to call back – not confidence inspiring, and an easy decision for Harriet and Henry to cross off their list.

The fourth lender to call seemed to be more inclined to be helpful. The representative was polite, listened to their needs and faxed over a Good Faith Estimate of closing costs and information about the loan program she was recommending they take. The problem was that she demanded a lock in fee, an application fee, and an appraisal fee the SAME day – otherwise the offer could change. Harriet and Henry asked for a few hours to think things over. The rep promised to call them at 8pm that evening. That was three days ago and they are not holding their breath. Their refusal to fork over a bucketful full of fees seemed to wipe them out of this loan officer’s memory. Harriet and Henry have been regretful about the fees they paid on the original mortgage loan when they purchased their home five years ago; this loan officer’s desperate attempts to talk them into laying out money before they had time to think about the offer was not a mistake they intended to make again.

Frustrated, they went back to their current mortgage lender – after being told it would take about six weeks and still involved a full application process after being an on time customer for five years, they eliminated this option as well.

The web site which Harriet and Henry found promised four offers. Let me offer you four simple rules all consumers shopping for a mortgage loan should follow. Whether you’re a first time homebuyer, or if you are someone refinancing for the fifth time in ten years and consider yourself a veteran of the mortgage wars, these simple common sense rules will save you money and disappointments.

1)TAKE NOTHING FOR GRANTED. HAVE A LIST OF YOUR GOALS AND QUESTIONS IN FRONT OF YOU BEFORE YOU EVEN START TO SHOP! RUN AS FAST AS YOU CAN FROM ANY LENDER TOO BUSY OR UNABLE TO ANSWER YOUR QUESTIONS WITHOUT OBLIGATION.

2)DEMAND WRITTEN COST ESTIMATES AND EXPECT A GOOD LENDER TO CHEERFULLY PROVIDE THEM WITHOUT COMPLAINT THE SAME DAY. NEVER RELY ON ANY VERBAL PROMISES!

3)PAY NO FEES WITHOUT DETAILS! A REPUTABLE LENDER WILL NOT LOOK TO COLLECT FEES BEFORE YOU ARE COMFORTABLE WITH THEIR OFFER AND UNDERSTAND THE COSTS INVOLVED.

4)DO NOT RUSH INTO THE APPLICATION PROCESS. TODAY’S MORTGAGE REALITY ALLOWS CLOSINGS IN LESS THAN TEN DAYS – THERE IS NO REASON ON EARTH TO PROCEED UNTIL YOU ARE CONVINCED THAT YOU HAVE THE BEST SOLUTION POSSIBLE FOR YOUR NEEDS AND FINANCIAL ABILITIES AND ANY FORESEEABLE MAJOR LIFE EVENTS ON THE HORIZON.

A Story by Gregg Marcus.