Here's how I got my job. I was a big fat failure as a freelance artist. I couldn't get hired to paint a fence. The economy was in the dumps after the dot com bubble burst and the son of Ronald Regan's Vice President had somehow gotten himself declared President of the United States of America. (Believe it or not you could still say that without a sense of irony back then, despite the close election.)
You can imagine that it was a pretty bleak time in my life.
I went out and put my resume on that soft golden paper from the office supply store and walked into a bank to answer an ad for a Mortgage Loan Officer. Judging by the preamble to this article you can see my chances were just slightly north of unrealistically idiotic and very south of qualified candidate. Lucky for me there was an imminent refinance boom and banks were hiring everyone from homeless squeegee guys to clown school rejects if they knew how to use a calculator and a telephone. (Since the invention of push-button dialing, clown school rejects have enjoyed a much wider variety of alternative careers in the telemarketing and the 1-900 Number businesses.)
I'll skip the gory details and fast forward about two or three years when I'm an experienced Loan Officer with all the jargon down pat. I can amortize the heck out of any principle balance. Just give me a term and a rate. Go ahead. The answer is Forty-Two! See?
Let me take a minute to explain a few things about the mortgage industry.
If you sell stocks or bonds you have to pass a very difficult test. If you want to be an Accountant, a CPA or a Financial Advisor you need to have a certain amount of education in economics and an accredited degree. To sell a house you must be a licensed broker. As I have explained, a trained monkey is eligible to be hired as a Loan Officer.
That's really not the issue. There are some very good Loan Officers out there who are highly trained professionals. There are organizations and institutions that will take nothing but the cream of the crop when it comes to putting together a team. Just like anything else, it runs the gamut. The difference is the time the consumer spends in search of a mortgage product and the Loan Officer to give you the deal. Most people come at it all backwards. They pick up the phone and dial twenty-seven different places and ask, "What's your rate?" and hang up. You'd have better luck at the horserace track. (Which by the way, if you care, I got a great tip on My Boy McGee in the fifth race at Aqueduct. He can't loose.)
If you'll excuse another equestrian reference, that method is like looking at the horse from the wrong end. Anyone will tell you what you want to hear. What they don't tell you is - how long that rate is good for, how your personal profile will affect the rate, and how much it's going to cost you to get that rate.
While you contribute probably 6% of your salary to your 401K and you probably trust no more than 5%, possibly as much as 10% of your income, if you can afford it, to your Financial Advisor, the average citizen must allocate a minimum of 28% of his or her gross income to her mortgage! Sometimes that number goes as high as 35-40% if you're stretching it a little.
Yet most people rely on fly-by-night Mortgage Brokers called the AAA Loan Co that they found on the back of a matchbook. They spend hours online comparing discount stock trading companies, subscribe to magazines and email lists, take part in chats and forums, watch tickers go by all day long during one of a dozen financial cable channels while some crazy guy screams at them and pounds a sound effect buzzer and then they sweat over investment counseling advise for a measly 5% of their gross income!
But a mortgage?
They'd take a mortgage from their friend's brother's former school chum who knew this guy at a party who got him a great rate in the late eighties. Not only don't you know this character and haven't even done an inch of research on an individual who is advising you as to the best way to spend 28% of your hard earned cash, but the great friend who recommended him conveniently forgot to tell you that they had to pay three points at closing to get that rate.
Buy 100 shares of stock and you climb Mount Everest to consult the oracles of Warren Buffet just in case you loose two bucks a share next week. But go buy a house that'll be one of the biggest investments of your life and any schmoe will do. To borrow a phrase from that other greatly unappreciated man, "Loan Officers get no respect!"