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With a grain of salt

Bob Kieber
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Financial Facts.BY BOB KIEBER

The older I get the more I use the sayings of my parents. The one that has always stuck in my mind is “with a grain of salt.” I am not sure where this comes from, who said it or even how it was originally used. But what it means to me is to take what you hear, and with that grain of salt, figure out what the real truth is. So when you read on, take everything I say with a grain of salt. The first grain of salt must be used when you are looking for a mortgage and you see and hear all the advertisements fighting to get you attention. Zero down, nothing down, no out of pocket costs, free this, free that, quick close, best rates, programs for everyone, bankruptcy no problem, foreclosure okay, no money no problem. I can go on and on about how advertisers are trying to get your eye or ear to differentiate their advertisement from the rest. If you do decide to call, then the advertisement did the trick. But keep in mind that the item that caught your eye may be the last thing you would ever want in a mortgage. If you have money to make a down payment why would you want to put down nothing, as the interest rate will be higher. Why would you believe that anything is free? Free credit report, free appraisal, free this and free that. Take it with a grain of salt. Remember this, there is no free lunch. If an appraisal costs $350 to $400 why would a lender want to pay for that item? Hint, they don’t. They will add that cost in somewhere in the loan. The interest rate may go up. The underwriting costs may go up; the origination fee may go up. Someone has to pay the appraiser, and I will guarantee that the one with the checkbook is the ones who finally pays that bill.

With another grain of salt know that if one mortgage lender has a new and innovative program others will have it, too. If not right now, they will have it in a couple of weeks. As an example I was notified by one of my investors recently that they will now lend on homes if the entire complex is deed restricted. Prior to this announcement, a maximum of 50 percent of the units in the complex could be deed restricted, now 100 percent of the complex can have the restriction. Since then four other investors have changed their guidelines to also allow for the 100 percent limit.Mortgage investors – those that I sell my mortgages to – are in business to approve mortgage loans. If they do not get loans approved, they make no money and they go out of business. Just like any supplier, they want as many outlets for their products as feasible. So I have the same investors as many other mortgage professionals. I also have investors that others may not have initiated a relationship with. So I may have, for a short period of time, a program that no one else has access to currently, and others may have the same. But in the long run, there is no one in the High Country that has exclusive rights to a mortgage program, unless they are lending out their own funds.



The bottom line is that you, as a borrower, need to take all the advertising with the proverbial grain of salt. Keep in mind that a big majority of mortgage programs available to one mortgage professional are also available to other mortgage professionals. Do your shopping for a mortgage lender just like you were shopping for a home. Look at a lot, pick just one.For answers to your mortgage related questions, call BOB KIEBER at (970) 262-1199 or e-mail him at rkieber@comcast.net. Bob is a local mortgage banker and principal of Resort Lending. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country.


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