21 Sep

Who Or What Judges You

General

Posted by: Jonathan Barlow


“As the big doors swung behind me I caught the echo of a roar of laughter that went up to the ceiling of the bank. Since then I bank no more. I keep my money in cash in my trousers pocket, and my savings in silver dollars in a sock.”

The writer Stephen Leacock concluded his story My Financial Career with those words over one hundred years ago. Times have changed enough that most of us must bank somewhere. The feelings in his story are familiar though, especially to anyone who has applied for a loan or credit, in person, at a branch of any financial institution. You remember that look from the account manager – that feeling of being judged? It’s no wonder surveys tell us most Canadians prefer a trip to the dentist over visiting their bank branch.

But with modern banking, who’s really judging you? When you apply for credit with most banks, your judge is not the person you’re speaking to, its something called Predictive Modelling. Simply put, most of the time, your loan application is adjudicated by a computer. The analysis is fairly detailed, perhaps even looking at the deposit history for your chequing account for the last eighteen months but in the end, if it doesn’t meet the right criteria, it will be declined.

If your account manager likes you or is anxious to meet his sales target, the decision can be appealed, likely this time by an actual life form. There’s still some problems though;

a) Even human beings love pattern and regularity. If you’re self employed, you know you don’t fit those patterns.
b) The human being looking at your application doesn’t know you. As humans, we’re apt to think the best of people we know.
c) The last point is the most abstract ( and the most “terminatorish”) but perhaps the most important. As large institutions give more and more of the decisions over to algorithms, the human decision makers become less and less able to exercise their critical thinking skills; it becomes easier to confirm the modelling decision and not think “outside of the box”.

I know, I can hear you thinking “ don’t make eye contact” and humming the tune from the Twilight Zone but, let me give you an example:

Last week I meet with some new clients, a wonderful couple who have a Home Equity Line Of Credit on their principal residence for about two hundred thousand dollars. Over time, ( let’s call them ) Bank of Running With Scissors had increased the rate on the HELOC to OVER 4%! It’s not drawn down but if it was, the monthly cost to the couple would have been a little over $700 per month vs $530 per month if the line were offered at standard rates. Its important to note that one of the spouses has a fifteen year relationship with the Bank of RWS. I almost put “has enjoyed a fifteen year relationship”…

Did a human make the decision to increase the rate? Nope, it was the predictive modelling.

Anyway, the important lesson here for the ( hopefully ) ten people that have actually read this far – most Financial Institutions will look to make as much profit from you as they can. They simply can’t afford to have the relationship with you that we would all like to have with the people we do business with.
 
When looking for mortgage credit in particular, its important to have someone who advocates for you and only you. That’s why there are Mortgage Professionals.

Regards,

JB

Jonathan Barlow
778-230-2572
jbarlow@dominionlending.ca

18 Sep

Sometimes Nice Guys Finish First

General

Posted by: Jonathan Barlow

Over the past couple of weeks, I’ve had some object lessons that point to the fact that being a Mortgage Professional is the right choice for me – that it suits what Paulo Coelho calls my “authentic self”.

After fifteen years working at one of the big five banks, I left, a little bewildered at the resistance I had met in my career path in more recent years. The feedback I’d received repeatedly was that I was too nice, too kind to be an effective leader. This was the common perception of me, regardless of (I’m being honest here, not immodest) some pretty spectacular results in all of my roles. The key to my personal satisfaction and perception of success was my desire to help people, to help them develop and thrive – sometimes in some very tough roles.

Spool forward to a couple of weeks ago, when I contacted a successful local realtor and neighbour, Lorna Slimman, for some advice on going forward in my new role. She provided some  concrete advice to me about building my network. She took the time and effort to help me, I think, because she is a nice, kind person.

Her advice to me was really focused on meeting local realtors and making a start on building relationships with them. So far I’ve clicked with three. Each of these three seem to have as much interest in getting to know me as I have in getting to know them. They each appear to be nice, kind people who are genuinely interested in people they work for and with.  ‘See where I am going with this?

On Thursday, I attended our Dominion Lending University seminar. I went, anticipating a “rah rah” session. It was and it wasn’t; It occurred to me towards the end of the day that there were two groups of people in the room, a bunch aspiring to be really great salespeople and others, who were simply really great people.

One of the first to speak is committed to the betterment of the industry, having written two books entitled “Be the Better Broker” and is planning another two. One of the other speakers talked of a frustrating coaching session with the writer, because “all he did was talk about his clients” rather than give him the magic key to productivity. Another presenter is so committed to financial education that he’s created a comprehensive online course for kids as well as teaching the same skills at the university level in four schools. Yet another took her twenty minutes not to speak of her financial success but of the far bigger part of her life; two decades of volunteerism. She, like all of them, is a nice, kind person who just looks to give back and enrich other peoples lives. They are all awesome, (in the galactic sense, not the nice cup of Starbucks sense).

On Friday, I met with some friends of my wife, because they needed some advice on a new home purchase. I was able to provide some immediate cost saving advice which pleased them, I think. We clicked because they are well, nice, kind people and I think because I got to be my authentic self for the two hours we chatted. We parted after two hours, with me plotting how I could enrich their lives.

Anyway, no matter where I finish, I feel like I’m home now – All I want is to help you.

Regards,

JB

Jonathan Barlow
778-230-2572
jbarlow@dominionlending.ca

6 Sep

Using A Professional Matters

General

Posted by: Jonathan Barlow

Behind the counter at my favourite fly shop

For most of us, buying a home is the single biggest purchase of our lives, something we’re likely to do only two or three times in our lives; more if we have a short attention span, like my Dad did.

For those of us that need help in the form of advice and confidence, a Mortgage Professional is a natural choice. You can get a similar experience from a Bank representative but, as I’ve said before, the individual who acts solely for you and not the lender, is a Mortgage Broker.

Contrary to what some will tell you, no two mortgages or individuals wanting mortgages are alike. Each is special and requires individual consideration.

That individual consideration will get lost, I guarantee you, when you approach a lender directly. The reason is that the lender has a specific template that they use, called a risk appetite, to determine who to lend to and what to lend on. If you or your property don’t fit that template, then they will not lend to you.

As I’ve said before, your Mortgage Broker’s Job is that of a match maker, matching you with a lender that suits your requirements, not the other way around.

By way of some examples, here are some recent financing challenges I and my colleagues have dealt with, some seemingly simple, some not so much;

Finding financing for a 400 square foot suite ( most lenders don’t lend below 500 feet ).

Financing a 60 year old manufactured home on a rental pad.

Financing a float home.

Completing a mortgage refinance on a 3rd rental property and financing a 4th.

Finding financing for a $500,000 motor home.

Finding 30% financing for a violin worth nearly two million dollars.

Like I said in my last post, I don’t care who you see, just make sure you see a Mortgage Professional to get the advice that suits you.

Again, sorry about all the yelling in the last post.

As always, if you have any questions, need help or would like to run through some scenarios, please call or email.

Regards,

JB

Jonathan Barlow
778-230-2572
jbarlow@dominionlending.ca

1 Sep

The Agitation Of Renewal

General

Posted by: Jonathan Barlow

Refinance

On my other website, mysistershouse.ca, I have a fairly lengthy explanation of why I became a mortgage broker.

Here’s a snippet from that explanation;

During a weekly call to one of my sisters, the one closest in age to me who lived in Toronto, the subject of our homes came up. At the time, she was a lawyer, an associate for a large firm and rented a flat in a house in Cabbagetown.
 
We were talking about how much she loved the area, when she said, “ I love it here but I’ll never be able to afford to buy around here”.
 
After a few minutes of shocked silence, all I could think to say was, “You idiot!”.
 
“I don’t care where you go but you have to go see your account manager and see just how much you can afford to spend on a home.“
 
In a once in a lifetime occurrence, she followed her older brothers advice and ended up with the knowledge and confidence to buy a lovely house a few months later, where she lived happily ever after. Actually, she upped sticks and moved back to England a few years later, but she is happy.

For me, the realization that many people lack the confidence and knowledge to finance their home purchase motivates me to write these blogs and try do what I do best; coach and develop people by providing them sound advice on mortgage financing.  

For those of you who are already happily involved with a lender who is financing your dream home, there is another opportunity for advice giving, which is largely ignored.It causes me and my fellow Mortgage Professionals extreme agitation; the mortgage renewal.

Case in point is a situation a colleague wrote about just this morning involving a client at a big bank.  The client was offered the following renewal terms, which were accepted because we naturally tend to trust what’s being offered from someone we know;

Mortgage amount $259,997 in a new 5 year fixed rate term with a 20-year amortization at 4.10% making the monthly payment $1584.51 and the balance after 5 years $213,266.26.

That’s not a typo – the same bank offered new clients 2.59% for the same term. I know there is a tendency to think that lenders ( in this case, a bank ) are working for you but they’re NOT. They want to make as much profit as they can, which is fair , but doesn’t really line up with the “we care” marketing, does it?

The only person that actually gets paid to act in your best interest in a mortgage transaction is a Mortgage Professional. I’m not just saying that. There are also consequences if I don’t do so at all times. More importantly , acting in your best interests is a core belief for me, a value if you will. My colleagues feel the same way.

So, to paraphrase the advice I gave my sister; “ I DON’T CARE WHO YOU SEE, BUT YOU MUST GO SEE A MORTGAGE BROKER AND GET SOME ADVICE ON THAT RENEWAL”.

End of lesson, sorry for yelling.

As always, if you have any questions, need help or would like to run through some scenarios, please call or email.

Regards,

JB

Jonathan Barlow
778-230-2572
jbarlow@dominionlending.ca