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SHOPPING AROUND?
HERE'S THE INSIDE SCOOP ON HOW
TO DO IT RIGHT!
First: make sure you are working with an experienced, professional loan
officer. The largest financial transaction of your life is far too
important to place into the hands of someone who is not capable of
advising you properly and troubleshooting the issues that may arise
along the way. But how can you tell?
Here
are FOUR SIMPLE QUESTIONS YOUR LENDER ABSOLUTELY MUST BE ABLE
TO ANSWER CORRECTLY. IF THEY DO NOT KNOW THE ANSWERS... RUN... DON'T
WALK... RUN TO A LENDER THAT DOES!
1.
What are mortgage interest rates based on?
(The only correct answer is Mortgage Backed Securities or
Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year
Treasury Note sometimes trends in the same direction as Mortgage Bonds,
it is not unusual to see them move in completely opposite directions. DO
NOT work with a lender who has their eyes on the wrong
indicators.)
2.
What is the next Economic Report or event that could cause interest
rate movement?
(A professional lender will have this at their fingertips. for an
up-to-date calendar of weekly economic reports and events that may cause
rates to fluctuate, visit www.capitalmarketfunding.com and hit the green
MMG Weekly banner - this is a copy of our weekly newsletter, let us know
if you want to be added to my weekly distribution list)
3.
When Bernanke and the Fed "change rates", what does this mean... and
what impact does this have on mortgage interest rates?
(The answer may surprise you. When the Fed makes a move, they can
change a rate called the "Fed Funds Rate" or "Discount Rate". These are
both very short-term rates that impact credit cards, Home Equity credit
lines, auto loans and the like. On the day of the Fed move, Mortgage
rates most often will actually move in the opposite direction as the Fed
change. This is due to the dynamics within the financial markets in
response to inflation. For more information and explanation, just give
us a call).
4. Do you have access to live, real time,
mortgage bond quotes?
(If a lender cannot explain how Mortgage Bonds and interests
rates are moving in real time and warn you in advance of costly
intra-day price change, you are talking with someone who is still
reading yesterday's newspaper, and probably not a professional with whom
to entrust you home mortgage financing. Would you work with a
stockbroker who is only able to grab yesterday's paper to tell you how a
stock traded yesterday, but had no idea what the movement looks like at
the present time and what market conditions could cause changes in the
near future? No way!)
Be smart... Ask questions... Get answers!
More than likely this is one of the largest and
most important financial transactions you will ever make. You might do
this only four or five times in your entire life... but we do this every
single day. It's your home and your future. It's our profession and our
passion. We're ready to work for your best interest.
SHOPPING...PART TWO!!!
Once you are satisfied that you are working with a
top-quality professional mortgage advisor, here are the rules and
secrets you must know to "shop" effectively.
First, IF IT SEEMS TO GOOD TO BE TRUE, IT
PROBABLY IS. But you didn't really need us to tell you that, did
you? Mortgage money and interest rates all come from the same places,
and if something sounds really unbelievable, better ask a few more
questions and find the hook. Is there a prepayment penalty? If the rate
seems incredible, are there extra fees? What is the length of the
lock-in? If fees are discounted, is it built into a higher interest
rate? Second, YOU
GET WHAT YOU PAY FOR. If you are looking for the cheapest deal out
there, understand that you are placing a hugely important process into
the hands of the lowest bidder. Best case, expect very little advice,
experience and personal service. Worst case, expect that you may not
close at all. All too often, you don't know until it's too late that
cheapest isn't BEST. But if you want the cheapest quote - head on out to
the Internet, and we wish you good luck. Just remember that if you've
heard any horror stories from family members, friends or coworkers about
missed closing dates, or big surprise changes at the last minute on
interest rate or costs... these are often due to working with discount
or internet lenders who may have a serious lack of experience. Most
importantly, remember that the cheapest rate on the wrong strategy can
cost you thousands more in the long run. This is the largest financial
transaction most people will make in their lifetime. That being said -
we are not the cheapest. Of course our rates and costs are very
competitive, but we also have invested in the systems and team we need
to ensure the top quality experience that you deserve.
Third, MAKE CORRECT COMPARISONS. When
looking at estimates, don't simply look at the bottom line. You
absolutely must compare lender fees to lender fees, as these are the
only ones that the lender controls. And make sure lender fees are not
"hidden" down amongst the title or state fees. A lender is responsible
for quoting other fees involved with a mortgage loan, but since they are
third party fees - they are often under-quoted up front by a lender to
make their bottom line appear lower, since they know that many consumers
are not educated to NOT simply look at the bottom line! APR? Easily
manipulated as well, and worthless as a tool of comparison.
Fourth, UNDERSTAND THAT INTEREST RATES
AND CLOSING COSTS GO HAND IN HAND. This means that you can have any
interest rate that you want - but you may pay more in costs if the rate
is lower than the norm. On the other hand, you can pay discounted fees,
reduced fees, or even no fees at all - but understand that this comes at
the expense of a higher interest rate. Either of these balances might be
right for you, or perhaps somewhere in between. It all depends on what
your financial goals are. A professional lender will be able to offer
the best advice and options in terms of the balance between interest
rate and closing costs that correctly fits your personal goals.
Fifth, UNDERSTAND THAT INTEREST RATES CAN
CHANGE DAILY, EVEN HOURLY. This means that if you are comparing
lender rates and fees - this is a moving target on an hourly basis. For
example, if you have two lenders that you just can't decide between and
want a quote from each - you must get this quote at the exact same time
on the exact same day with the exact same terms or it will not be an
accurate comparison. You also must know the length of the lock you are
looking for, since longer rate locks typically have slightly higher
rates. Again, our advise to
you is to be smart. Ask questions. Get answers.
As you can imagine, we wouldn't be encouraging you
to shop around if we weren't pretty confident that we feel that we can
give you a great value and serve you the very best.
Please call us with any further questions you may
have at this time - we are ready to work for your best interest! |
