J.T. asks from Portland, OR on February 12, 2008
Doing Business with Friends?
I have a friend in another state who is in the mortgage industry, and does home loans. Business is very slow right now and her and her husband are having a hard time financially. My husband and I are currently seeking a home loan and I called to ask her advice on a few things. Unexpectedly, she said she could do the loan for us and that all the paper work could be done through fax and mail. I love this friend and don't want hard feelings. I just have concerns about 1) Doing major financial business with friends 2) Doing major financial business via mail. Buying Avon or Pampered Chef from a friend is one thing.... Am I being overly cautious? Anyone else been in a similar situation? What would you do?
1 mom found this helpful
So What Happened?™
Nearly 50 responses! Wow! I decided NOT to do a mortgage loan with my friend. I just didn't WANT to for so many reasons, none of which were distrust in her. I've known her for 20+ years and this friendships has with stood the test of time already. We know way more gnarley stuff about each other than finances. I would rather send her a gift card, a love card, call her up and have a heart to heart or talk shop/politics/craziness... Because I want to do it!! I just didn't want to feel obligated to do something I'm uncomfortable doing. Nor would I want a friend of mine to do business with me out of obligation. Thats what it ended up coming down to. Thank you all so much for the wide variety of view points. It was great to hear them all. I am feeling good about my decision to respect my own comfort zone and personal boundries. Oh, and my friend offered complete professionalism and respect about my decision. What a doll!
M.J. answers from Portland on February 13, 2008
Let her know it makes you a little uncomfortable mixing business with friendship, then make it clear she can give you a quote, but you will be seeking other quotes too. If she is a professional, she will understand. Email and fax is okay...but if you insist on mail, they can send you an overnight envelope for like $15 more.
M.G. answers from Spokane on February 13, 2008
I have been in the real estate industry for 20 years. I was laid off last fall myself.
I have always had a passion for sharing my knowledge with people who I think would appreciate it. Those people are the common everyday lay person who doesn't get a loan every day of the year so you don't know the in's and outs of the industry and usually get taken for alot of money.
From my experience, here's my advice. There's a couple of ways to look at this....First of all, we would all like to help our friends when they are in need. That's what friends are for - right? But in all fairness - you have to look out for yourself and try to get the best deal for you.
If I were you, I'd ask for a good faith estimate for the loan costs based on the loan amount and interest rate that you are wanting from your friend. Tell her you want to take a look at the costs to see if it justifies the expenses.
Then contact a loan officer at your regular bank of your choice and get that person to give you the same information ie: a good faith estimate based on the same loan amount. Compare what the interest rate is on that same loan amount as well as the costs involved.
USUALLY, depending on your credit scores and your work history - a loan officer at a bank can get you a better rate with less costs involved than a mortgage lender.
The reason why? The mortgage company is not the lender - they have to find a lender to loan the money so they are - the middle man - and the middle man wants to get paid for his time as well as anyone else - so there are extra fees. With a little more research, you might have been able to avoid those EXTRA FEES by going directly to the bank who WILL loan the money.
It depends on your particular situation with your work history and credit scores.
Your friend could waive the extra fees involved but I'd say that if she is hurting financially - she wouldn't be able to waive them and make any money herself. That's how she gets paid.
Just check it out and educate yourself on what you are about to jump in and do.
Right now - values are down all over the United States but interest rates are good. If you are looking to get a better rate on your home loan than you have now, be sure that you get at least 1% less on the interest rate than you have now and that you are willing to stay in the house long enough to re-coop the money or it's really not worth it.
Ask alot of questions of both parties (ie: loan officer at the bank and your friend at the mortgage company) about the fees and the market in your area.
There are alot of hungry people out there in the lending industry that will tell you just about anything to get your business. (nothing personal about your friend - just in general) Think about it!!
Be careful!! If you are interested in an honest person's advice to work up a good faith for you, let me know. I have a friend who has lived in the same area for over 30 years, has been a loan officer for 20 years. She talks people out of doing a loan with her if it isn't in their best interest. She has the same passion that I do with wanting to truly help people and educate them about what they are doing. Not make money off of them.
The technology these days is incredible for e-mailing documents with very few problems. It's done all the time. That's really the easy part of the loan process. Good luck!!
1 mom found this helpful
J.B. answers from Seattle on February 13, 2008
I'm a loan processor and I have been working for a broker/loan officer for 3 years, Most of our work is through email, mail and Fax. With all the technology that's pretty standard these days. My Loan officer mostly does her loans for friends or family and we have never had a problem But I truely believe it depends on the friend. If you are having reservations about it then don't do it. Or at least ask her for a good faith estimate first and tell her your shopping for the best rate.
C.C. answers from Seattle on February 13, 2008
I have been loan officer in the past, and 1 thing I can tell you is that home loans can be tricky and things do go wrong with them. That could be a very delicate situation with friends. If your instinct is not to do business with friends or through the mail, listen.
S.S. answers from Eugene on February 13, 2008
I am real estate broker and I can say that the best thing you can do for your friend is help them by supporting them in there bussiness and if they are good friends who more would you want looking out for you than a friend. Of course you will want the best deal and I find that when I do busssiness with starngers by the end of it we have become friends! Are they true friends?
S.... Remax Integrity
E.A. answers from Seattle on February 14, 2008
I have just gone through something similiar. She wasn't a friend but a friend of a friend. The company had great mortagage plans so I did use the company but went thru a branch where she didn't work. These days lots of things are done on-line and as one who still straddles the 20th and 21st century, I was OK with doing all of our mortgage paperwork thru email. Make sure it's a company that you are comfortable with and has a solid reputation.
The quickest way to lose a friend is to mix business with friendship. Although in many instances it can work, everyone needs to the have the same understanding and have plenty of paperwork. In this instance there are so many mortgage companies that you can go to. If you are truly uncomfortable explain this to you friend and hope she understands, after all, she is going to be privy to ALL of your financial information. May be this isn't something you want to share with this friend, that's fine. There's no rule book that says we must share every facet of our lives with all of our friends. Personally, I would not do this. There are so many mortgage companies available.
Trust your gut! E.
S.W. answers from Portland on February 13, 2008
You are going to pay someone to to do the loan. It might as give the business to a friend. Do not expect any preffered treatment with regards to discounts and all will be fine. As for doing a loan from another state, no problem. I have done many loans from clients in other states and found it can sometimes be easier for the client.
Your friend will give the terms of the loan and if you feel you can get a better deal somewhere else move on at least your friend will know you gave them an opportunity for their business. If they are professional they will completely understand.
L.R. answers from Portland on February 13, 2008
Most home loans are done via fax nowadays, so that's not out of the ordinary at all. If you'd like to use your friend, make sure you get at least 2 other GFEs, and only go with your friends if they are truly giving you the best deal. If they don't understand that, then they are being unreasonable.
We currently have our house listed with a good friend who's a realtor. She's sold our last 2 houses for us and has done a great job. Yes, there's a little bit of a feeling of obligation (what if the house doesn't sell and we want to go with a different realtor?), but she's very professional and I know she'd understand.
Make sure your friends know this is a business transaction and that you will be treating it as such. If they're ok with that, then go for it, but if they're acting like it's a "friend thing" I'd be very cautious.
K.P. answers from Seattle on February 19, 2008
I really think you would be doing your friend a huge favor.
we purchased a home in AZ and did the paperwk. via email,phone and fax.
you would have to have a fax tho. we were happy with our transaction.