Hi all: I hope your Wednesday is treating you well!
I wanted to give all of you some tips about how to correctly shop for a mortgage. I think most of us want a painless process as we're so busy these days. The danger is choosing the first or the lowest or best sounding deal out there.
Case in point: I had a client of mine recently who got a 30 year fixed rate of 4.75%. He's putting 20% down and his credit is excellent. He was wondering if a better rate could be had because he had heard the advertisements for rates of closer to 4.5%. Here is what I said. Yes, lower rates could probably be had but it may either involve paying points or coming up with a higher down payment (say 40% instead of 20% which may lower the rate another notch) for example. My client's wife's response was she figured it had to be something. We all know this to be the case. If it sounds too good to be true, it probably is. With all of this in mind, here are some quick tips for successfully shopping for a mortgage.
1) Take the time to talk to more than one loan officer. Do it face-to-face if you can. I still hear the horror stories about loan officers overpromising and underdelivering daily. This can be avoided by meeting with them in person in many instances.
2) Your loan officer should offer you options on your mortgage, etc. Yes, most people would like a 30 year fixed mortage or something equivalent. But ask yourself this question. How long do you intend to stay in your home? I recently have done quite a few loans that are ARM's (Adjustable Rate Mortgages) that are fixed for the first 5 or even 7 years and then adjust after that. If you don't plan on living in your home forever, ARM's can be an alternative. Also, I've seen borrowers who are very good and disciplined with their money choose ARM's. It gives you options as ARM rates are at least 1% lower than fixed rates in most cases.
3) We all get our money from the same place. If you're offered a no fee loan expect to pay more for that feature. We are all in business to make money. The bottom line is because of the Dodd-Frank law implemented in April of this year, your closing costs went way down.
4) Listen to the loan officer you choose. I know most of you do. If you're asked to provide more information, please get us what we need. These days, loan files can get kind of thick. Underwriting is tougher than ever and we need to document everything. Loans are being done every day but they're being done by loan officers who are knowledgeable.
5) Try not to take choosing a loan officer lightly. A good one can make the difference between you getting your loan closed and not. In fact, if you're buying a place nothing happens if the loan officer can't get the loan closed.
6) Resist the urge to jump at the first and best offer. Most of the advertising we hear is already dated and is based on the perfect loan. Choose someone instead who you can trust. Kudos are given if you choose someone local who was either referred to you or has a great reputation.
In sum, I wish you well as you shop for your mortgage. One great thing about our country is we have the ability to choose. But we all need to choose wisely. Otherwise, it could be a trip to hell and back! Thanks for reading. If you need further information please
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