“You can’t change those around you, but you can change who you choose to be around.” This is wise advice that too few people practice. We often make friends with individuals who are less than virtuous, and if you surround yourself with such people you will soon find that their poor choices and bad habits have rubbed off on you. It’s crucial to seek out and make friends who possess qualities that you wish to emulate. This advice applies not just to personal relationships but to business relationships as well. Choosing to do business with the wrong firms can have detrimental effects on your finances and well-being. On this week’s show, we discussed how to find the right kind of firms and how to cultivate lasting relationships with them.
I often think back on my teenage years and positively cringe when I consider some of the friends I had and how I behaved around them. Humans are highly susceptible to peer pressure; we want to adopt the behaviors and customs of those around us. Unfortunately, this isn’t something you grow out of. Adults are just as liable as kids to associate with the wrong kind of people and to let those people negatively affect them. Maybe it’s a handyman or a mechanic that you like on a personal level, who does cheap work and plays fast and loose with the rules. Eventually they’ll play fast and loose with your house or car. They’ll make some big and expensive errors then disappear entirely when you try to have them reimburse you for their mistakes. You’ll soon wish you had hired the more expensive but more honest and reliable individual from the beginning.
Now consider this dynamic in the context of your mortgage, which for most people is the longest-term and most expensive liability they’ll ever have. How much thought do people put into choosing their mortgage lender? Maybe they saw the firm’s advertisement on TV; maybe they were referred by a realtor they found in the phone book; or maybe they searched online and that company was the first to come up. These methods, while convenient, are not wise ways to find a lender. A flashy TV ad tells you nothing about the company’s ethics or products, while most referrals operate on a quid pro quo platform. Realtors or homebuilders may have ulterior motives when recommending a lender.
Lenders are not all created equally. When we’re talking about six- and even seven-figure transactions, that is a lot of money sloshing around and many lenders are there just to get a quick piece of it. Many with originate a loan and immediately sell it to a different investor, so that you end up in a 30-year relationship with a company you never knew existed. Others enlist the help of servicers so that they still own your mortgage but someone else handles your payments. Since these servicers make their money from the investor rather than from the individual, they often provide very poor service on the very loans they’re servicing!
This is why it’s important to choose a lender as you would choose your friends. Get to know them before investing in a relationship. Take the time to understand their philosophy, their process, and their intentions for your loan. If they only seem interested in quickly originating your loan then selling it off, it may be best to look elsewhere for a company that prioritizing your needs over their own. And, yes, such companies do exist. If everyone made a conscious effort to only associate with companies such as these, everyone’s lives would be drastically improved.