Why You Should Opt-Out of Pre-Screenings BEFORE You Apply for Your Mortgage
TL;DR: Opting out of pre-screenings gives you the power to choose how you're spending your time shopping lenders instead of having a lot of lenders call you to “sell” you.
I have your best interests in mind and I’m trying to keep you from getting 100+ phone calls from lenders you don’t know who may be offering you things that sound good, but could not be the full picture. I’ll explain.
One of the things I recommend my buyer clients do before they apply with any lender for a mortgage is to visit optoutprescreen.com and sign in to opt-OUT of the offers. If you choose not to opt-out, basically what happens is that a whole bunch of other lenders who are paying for potential client leads will get your information and they’ll be told that you applied for a mortgage. They know that means you’re shopping for a home or refinancing and they want to be the one to close your transaction. While it can sound like a good thing, it means that ALL of those lenders are going to be calling, texting, and emailing you to try to get you to apply with them. Those lenders know that they are up against a lot of other lenders, including the one you initially applied with, so they tend to tell you really good sounding numbers.
Here’s why I don’t like that:
It can feel very salesy and like they do not have your best interests in mind. Remember, they paid for your information and they want to win out against all the others. I’m not saying buying leads is bad, but I am saying that it makes it a more competitive situation. We all know someone out there who is so competitive that they’ll say and do anything to win.
They may tell you interest rates that sound way better than what you’ve already been told, but you do have to ask if that is a rate you’re paying to get. The question to ask is “Does that rate come with discount points?” and then you should ask how much money it adds to your closing costs. We can always do a cost-benefit analysis on whether paying those discount points for the lower interest rate is worth it. It mostly depends on the amount of time you’re planning to stay in the house and/or the amount of time that may pass before you could refinance to a lower rate. Something you may want to consider is getting a temporary buy-down, which we can discuss those terms with a trusted lender.
These lenders are almost never local to our market. The reason that matters most is because we have programs and options that are area-specific. So, if a lender in California wants to lend in Georgia, they can absolutely be licensed to do so, but they may not know about the Georgia Dream, Atlanta Federal Home Loan Bank, or Atlanta Housing programs that we can use around here. There are also programs by county and cities, so I want them to know our local options IF you need that. If you have all your money saved and ready to go and you have good credit and you have no questions, then you could probably close with any lender. In that case, just pick one you like the most and offers you the best value.
And why would you want like 100 more phone calls than the spam calls we all already get daily??
Now, I’m not saying that all lenders are out to get you or bait-and-switch you, but I do want you to be aware of how that’s happening. I’ve heard from clients who chose not to opt-out that some of these lenders will SAY they were given your information by ME, your agent, and I can guarantee that it would not be me. I ALWAYS directly connect you to any lender I am recommending via a text or email so that you can easily continue the conversation with the lenders. I do not give out your information like that, but they’ll say it because they are trying to get you to trust them. Again, I don’t like that. I like transparency.
Why you WOULDN’T want to opt out:
You may want to shop all of your options. Fair! You SHOULD shop a few lenders, at least. Most people only talk to one. I usually want you to talk to a few people because, honestly, the programs the lenders offer vary a lot. So, I always aim to connect you to a few who fit your financial situation best and figure out which one will offer you what you need to get to closing. Some lenders don’t offer down payment assistance, so I wouldn’t want you to waste your time applying with them if you need down payment assistance. Some lenders don’t want to answer all of the first time buyer questions, so I wouldn’t want a first time buyer working with them.
You still want credit card offers in the mail. I guess that’s a valid reason. I trash or recycle every single one I ever get, but that’s fine if you want to see them. The good news is that you could opt out and then opt back in once you close on your home.
This is all my opinion and experience. I want what is best for you. I think you will be served best by speaking to handful of lenders local to your market who work with the programs and financial status that matches your needs. If you believe that hearing from a whole bunch of other lenders is what serves you best, then by all means, do that. Call and talk to however many makes you feel like you’ve done your research. I’ll be here to help you find the house once we have that pre-approval in-hand, my friends.
