| SHOPPING AROUND? |
| Here's the inside scoop on how to do it right! |
| First, make sure you're working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place in the hads of someone who is not capable of advising you properly and troubleshooting theissues 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. These bonds are bought and sold daily by large investors. Bond prices, just like stock prices, fluctuate by the minute. If your mortgage person states rates are based on Fed Funds rates, i.e. the Prime Rate or Treasury Rates, they are dead wrong. While the 10 year Treasure 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 calender of weekly ecomic reports and events that may cause rates to fluctuate, visit my website and click on the green MMG Weekly banner. 3. When Bernanke and the Fed "changes 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 are changing a rate called the "Fed Funds Rate". This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets. 4. What is happening in the market today and what do you see in the near future? If a lender cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are talking to someone who is still reading last week's newspaper, and not a professional with whom to entrust your home mortgage financing. A response such as "Gosh, if I could predict the future I wouldn't have to work for a living" would be a huge red flag that your loan officer is not engaged in their industry. My last bit of advise for shopping rates is to ALWAYS insist a lender provide you with a Good Faith Estimate and Federal Truth in Lending. Legally, they are required to do so when an interest rate or payment is being quoted to you AND they DO NOT have to run your credit report in order to provide a Good Faith Estimate. Make sure that the rate quoted you is for a long enough time period for your loan to be processed and closed, factoring in the closing date if your transaction is a purchase. It's also important to obtain your quotes at the same time. Waiting days or hours between rate quotes is comparing apples and oranges as rates change constantly. Ask the lender if they guarantee their good faith estimate. Ideally, you should be able to bring your good faith estimate to the closing and not have surprises with significant differences in fees. Lastly, find out how long the lender has been in the mortgage industry and what their personal qualifications are. As of January 2007, Washington State will require licensing (unless the originator works for a bank!) and background checks. Anyone can be a lender and handling your largest investment. Be smart... Ask questions... Get Answers! More than likeley, this is one of the largest and most important financial transactions you will ever make. You might do this four or five times in your entire life...but as a Certified Financial Planning Specialist, I do this every day. It is your home and future. It is my profession and passion to work for your best interest. |
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| Rhonda Porter Certified Mortgage Planning Specialist Mortgage Master Service Corp. www.rhondaporter.com |
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