Monday, March 23, 2015

Lowest Rates Today?

Spring is here and there's interesting home advice out there. I have helped clients with several purchases this week - watch those bidding price wars! Holly cow those can be rough! After an uptick in rates, they have dropped back down so refinances are keeping us busy too. What's all that mean to you? Well, with Spring comes home buying advice. The Consumer Report article shaking up the mortgage brokers by telling consumers to go to a direct lender is not a shock. However, there's so much more than just shopping the rate. I can't emphasize this enough. Shopping the rate misses the mark in so many aspects. If you call lenders and ask for their best rate, it doesn't take into account the variety of loan programs as well as the cost of mortgage insurance. I'm not a fan of Bankrate as it is very misleading to the consumer; the rates are with fee and many people don't click on the fine print to see exactly how many points they are being charged. Shopping for the best rate or lowest rate misses the mark on so many important pieces of your mortgage, such as funding fee (or not), how down payment affects your interest rate and of course, last, but not least credit score. What if you are interested in one loan with mortgage insurance or a 1st loan with a 2nd loan? That affects interest rate too. What if you ask for the lowest rate, but you don't qualify for it? In order to get the best rate, you need the best lender, who will find you the best loan program. That's how you get the best mortgage. If you get the lowest interest rate, but it has the highest mortgage insurance, your total monthly payment could be more than if you had a higher interest rate and lower mortgage insurance.  How long do you need to keep the mortgage insurance? Good question. FHA now requires you keep the mortgage insurance for the life of the loan! FHA also has an up front funding fee. If you can get a lower interest rate with an FHA loan, but you don't take into account the other fees, can you see how you could have a higher monthly mortgage payment AND payout wasted thousands of dollars over the life of the loan? Is there a better loan for you?  The best lender will help you get the best loan for YOU. Here are 10 questions to help you get started on your search for the best lender.
1. Are you a direct lender or a broker?  How does that affect me?
2. Can you issue a conditional approval on my loan within 2 business days?
3. Can you guarantee you will close my loan in 30 days or less?
4. Do you have any written references? Do you have client surveys you can share with me?
5. What is your closing ratio?
6. What are the upfront costs I will incur during the loan process before I close?
7. Do you attend the closing?
8. How long has your company been in business?
9.Are you a licensed Loan Officer?
10. How long have you been in mortgage industry?

There's a lot more to shopping banks than the rate. I always find that an educated consumer makes for a great client.

***Please keep in mind this is only an example for illustration purposes.  These interest rates may not be available and/or you may not qualify for this loan type.

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