Thursday, December 30, 2010

If you are going to buy a home with a mortgage, you shoud read this!

Questions You SHOULD Be Asking Your Lender

by Dean Hartman on December 30, 2010 · 0 comments
We have run this post before but want to make sure you still are asking the right questions of your loan officer. Here is a great list from Dean.  – The KCM Crew
More and more, consumers are learning that there is much more to getting a mortgage than just the interest rate and points.  A good mortgage planner is more in the advice business than the lowest price business.  With tightening guidelines, often the question first is “Will the loan be approved?”  But moreover, the borrowers’ concerns need to involve some of the answers to these non-price questions:

1. What type of lender should I use? 

There are three basic types of lenders.  Mortgage BROKERS promote a broad product menu, competitive pricing, and entrepreneurial approach; however, BROKERS cannot lock, commit, or approve your loan because they are not actual lenders.  Banks and Credit Unions rely on financial strength, direct lending capabilities, and stability; however, the have limited product menus and often a “cover my ass” mentality.  Mortgage BANKERS blend the best of both- direct lending ability, financial strength and stability, wide product offerings, competitive pricing and the entrepreneurial spirit.

2. What loan products should I be considering? 

Make sure your lender has multiple types of products (Conventional, FHA, VA, State Mortgage Agency Products, etc.).  While most people today do choose a 30 year fixed, it is not always the wisest choice.  Borrowers need to consider how long they will be staying in the home and any changes in their income during that time period before just accepting the same loan as everyone else.  Additionally, with many properties in need of some renovations or repairs, you need to explore the FHA 203K Program discussed in last week’s blog.

3. Should I lock or float my interest rate? 

Most mortgage planners are trained to dodge this question.  I believe you should be hiring an expert who should have an informed opinion about the direction of rates….in the short term and the long term.  Weighing numerous factors ranging from your projected closing date to upcoming economic reports, a good mortgage planner can counsel a client into saving money.  While no one can predict with absolute certainty, you need to reach a comfort level that the lender you choose has the best information and your best interest at heart.

4. What are mortgage rates based on? 

There is only one correct answer.  It is the pricing of Mortgage Backed Securities.  (Unfortunately, too many people answer the 10-year Treasury Bill.)  If you get the wrong answer on this basic question, what else don’t they know?

5. How do economic releases impact rates? 

How will a Jobs Report, a Fed Board Meeting or Inflation Number affect your home loan?  Your mortgage planner should know, should explain it to you, and keep you informed.

6. Can I improve my chances of approval while keeping costs low? 

Sometimes even minor improvements in a credit score, the amount of your down payment, or how you position your assets can make a big difference.  During your counseling sessions, your mortgage planner should be advising you on how the “little things can make a big difference’”
Good advice, whether it’s from your doctor, lawyer, real estate agent or lender, can be invaluable.  Finding a lender who is an expert….who has your goals in mind…and who offers creative solutions is one of the most important factors in a successful real estate transaction.

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