Dear Mr & Mrs Borrower,
"What kind of payment do you want and or feel comfortable with?"
This is a question that I always ask right in the beginning. But in many cases, what I get from the consumer when asking this question is, "what is my interest rate". And then I try to go into detail, asking my question over again and another question asking what your goals are in the near future when buying your new home.
There are several reasons why rate should not be an issue. Let me tell you a quick story about good old Mr. Rate. I had a borrower that called me up because a realtor recommended them to me. He had previously shopped with two other lenders, but that was a full week before I had spoken to him. I quoted him a rate on a Monday. Rates started to go up by the middle of the week and continued up until the following Monday. I called this person in the middle of the week and gave them a heads up about rates increasing. I sent this person an application on Friday, because he had an offer accepted on Thursday. I told him to call me anytime over the weekend. He decides to call me Tuesday and started asking me about why the rate was higher. He then decided to call a few more lenders, who gave him lower rates. Keep in mind, he needs to close in 2 Friday's, which is less than 2 weeks away and it is a FHA loan. This person doesn't even give me the courtesy of trying to match or beat the rate. Probably because the other loan officer was talking negatively about me and that I was making more money on his rate. Well, it turns out that Tuesday and Wednesday, rates improved. I could now beat this lender by 1/8%. As I type this, I am finding out that this lender might not get this closed in time now and is trying to point the finger at my company, because it took us a day and a half to release the FHA case number. Just as a FYI, this won't delay a thing. But the consumer and realtor doesn't know or understand this.
Overall, when I first asked this person what payment they would be comfortable with, it was way above what the payment was even with the higher rate. Too many people get hung up on trying to get the lower rate. Sometimes in your mind, a lower rate means that you can afford that payment. When in reality, you should start with what payment you can afford. And now because of the situation and just for the fact that this consumer went with another lender, he might not close on time. And it could cost him his deposit of $2,000. Mr. & Mrs. Consumer, do you want to take this kind of risk? Dealing with a mortgage professional should be important. Finding someone on your own, that might make promises that could be broken, could cost you money now and down the road.
So Mr & Mrs Consumer, why should rate be so important? If it doesn't match the payment that you would feel comfortable with, rate would be irrelevant, right? Think about this..... You tell me that you don't want to go over a payment of $2,500 a month. Yet, you want to hear rate. I tell you 6.00% and you are thrilled. But your payment on the home that you like is $3,500. Even if the rate went to 6.5%, your payment would go up to $3,600. It's way out of your price range. Let us do our job correctly, and the end result would be a very smooth and happy settlement. Take the risk of talking to an order taker, who loves to give rate quotes? Again, could cost you thousands of dollars when all said and done.
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For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
Jeff,
Powerful Post,
This should be the first question any mortgage professional asks. This is what separates the professional people like yourself from the loan hacks of the world.