Recently I have been surfing Blogs seeing what Real Estate Agents are saying about lenders, and whether or not a Real Estate Agent should be involved in a clients financing. I have read numerous posts about the evil Loan Officers who are stealing money from the borrowers, putting them in "predatory loans," and how the Loan Officers purposely hold up closings to inconvenience the Agents and the Buyers. While I agree with little of what is said on the Agent side, I can see where it is frustrating to not work with a professional Loan Officer, someone who communicates clearly, and delivers above what they promise.
Purchasing a home is the largest financial transaction of a person's life, it is far too important to place into the hands of someone who is not capable of advising them properly and troubleshooting the issues that may arise along the way. You may ask, how does one know if you are dealing with someone that is a professional? The answer is simple, ask a few questions.
There are FOUR QUESTIONS A LENDER MUST BE ABLE TO ANSWER. IF THEY DO NOT KNOW THE ANSWERS TO THESE QUESTIONS, advise your clients to, RUN, NOT WALK, RUN TO A LENDER THAT DOES!
1) On what are mortgage interest rates based?
The 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. Email me, ddoerr@sterlingcapital.net, and I can send you a copy of the latest Mortgage Market Guide Daily update. If you would like to be added to my email distribution list, please include "MMG Newsletter" in the subject line.
3) When the Federal Reserve Chairman Bill Bernanke and the Federal Reserve Board "change rates", what does this mean; and what impact does this have on mortgage interest rates?
This answer may surprise you. When the Fed makes a move, they change a rate called the "Fed Funds Rate" or "Discount Rate", the rate at which banks loan each other money. They have an impact on: credit cards, Home Equity Lines of Credit (HELOC), auto loans and such. On the day of a Fed move, Mortgage rates most often will actually move in the opposite direction as the change. This is due to the dynamics within the financial markets in response to inflationary pressures. For more information and explanation, just shoot me an email with your phone number and I will be happy to answer any questions you may have.
4) Does the LO have access to live, real time, mortgage bond quotes?
If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a 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 your 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!
Have your clients be smart, have them ask questions, and get the RIGHT answers!
More than likely, this is one of the largest and most important financial transactions your clients will ever make. They might only purchase a home four or five times in their entire life. I do this every single day. It's their home and their future. It's my profession and my passion. I am ready to work for their best interest as you are
If you would like a Copy of these questions to hand out to your Clients, I can email you a copy in .pdf format so you can print them and hand them out, or email them to your clients to be green!
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