Getting The Best Mortgage Rates
(Careful, there’s only ONE best)
A question I get so often from homeowners looking for a mortgage is, “How do I get the best mortgage rates?” or “What is the difference between you and the other guy?” Everyone wants the best mortgage rates or best deal available. That’s obvious. What’s not obvious is whether or not you are truly getting the best deal. For starters, let me ask you: How many “best deals” are there? Really there is only ONE “best deal” because you can’t have more than one “best deal” (that’s why it’s the BEST). Out of the thousands of lenders and programs, how sure can you be you are getting the “best” deal? Especially when the industry is laden with salespeople all telling you THEY have the best mortgage rates (many of which tend to exaggerate or even flat out lie).
I think it’s safe to say that all consumers want to feel confident that they are working with someone who is honest, genuine, hard-working, and has your best interest in mind. They also want to know they are in the hands of a company (or individual) who is reputable and credible because the differences between Option A and Option B can factor into the decision of whether or not the deal is the “best” deal for them.
Getting the best deal greatly depends on how one defines the “best deal”. When shopping for a mortgage, most homeowners think of ONE aspect – the PRICE (or COST). In the mind of a homeowner, price is related to TWO elements - Interest Rate and Closing Costs – and most homeowners know to ask about those two elements. What they don’t consider is that there are other factors that affect COST – factors the homeowner does NOT ask about. Getting the best deal involves not only the right rate & cost, but also getting the right PERSON / COMPANY to do the job.
While our rates & costs are extremely competitive, there are other factors homeowners need to consider:
Is your lender consultative? As a professional mortgage originator, it’s important to understand the homeowner’s financial goals for the future so that we can they can have several loan options that might be appropriate. Will the homeowner be retiring soon? Is there going to be a change in employment? Are there any financial matters that could affect the future income (good or bad) that need to be considered? Are there kids going to college soon? Many mortgage originators I know put every one of their customers into the same loan – a 30 year fixed. While this makes sense a lot of the time, it may not always the best option. There are times when a 25 year, 20 year, 15 year, or an ARM loan makes more sense. Sometimes the homeowner has more than 1 property, and then strategizing becomes even more important. Homeowners don’t always know what questions to ask. There have been many times I’ve worked with a homeowner who thought they had their strategy figured out and upon discussing some other creative options they changed course (for the better). Oftentimes you don’t get this level of consulting with larger banks.
How is their appraisal process? These days, all of the lenders have to use AMCs (appraisal management companies) to order your appraisal. Not all AMCs screen their appraisers the same way. Does your lender use an AMC whose appraisers may not be experienced in your geographical area? Are the appraisers brand new? Does the AMC bid jobs out to the lowest bidder therefore affecting the quality or turnaround time of the report, both of which can result in delays that can cost you money? Does your lender do any type of precursory research on your market so that you can understand the various outcomes and how that impacts the deal (and therefore the cost)? Call me so I can explain how this important element can make or break your deal.
When will they lock your rate? Find out when the lender will lock in your interest rate. Will they do this in the beginning, middle or end. This can impact your loan, and therefore impact the cost significantly. Most homeowners don’t think to ask about this.
What is their processing time? Find out how long their loan process is. Time is money and the longer the process takes, generally the more it will cost you. Also, the longer the loan is “out there” in process, the higher the chances things can go wrong. Interest rates can change, home values can change depending on the comps in the area, and additional mistakes can be made. All of these can have a meaningful impact on the cost of your loan.
Ask about their past performance (experience)? Not all people have the same work ethic. Some doctors are more knowledgeable than others. Some lawyers are sharper than others. And some athletes are better than others. The same is true for Mortgage Originators. Make sure you interview your mortgage professional and find out how they’ve overcome the many obstacles that come up in the loan process. Ask them about their past performance, what percentage of submitted loans they successfully close and how they address challenges the come up. Underwriters these days are required to ask for so much more than ever before. This is your opportunity to really put your Mortgage Originator to the test. Tenacity oftentimes is the ONE characteristic that separates those who can get the job done from those who might not.
How accessible & involved are they? While your loan is in process, there will be no less than 5 or 6 people that will be involved (processor, originator, underwriter, appraiser, doc drawer, funder, escrow officer…) and they can all affect the outcome. Your loan will be in process for 3-5 weeks on average. Assuredly, it’s important to you that you can reach your mortgage originator day and night, weekdays and weekends. If it’s a purchase, this is one of the biggest transactions of your life. Having someone you can contact quickly and frequently is important and lets you know the transaction is just as important to us as it is to you. And having someone who is intimately involved in every step of the way is critical.
Do they really care? They say that in less than 10 seconds, people will make a first impression about us. In the caveman days, our instincts were engineered to keep us out of danger and to make vital, quick decisions for survival. These days, we still have those instincts, but they are used in more sophisticated ways. Yet they are still designed to keep us safe from danger. An example of the danger I am referring to is relying on someone for an important transaction who really doesn’t care all that much about your needs and goals. Luckily we are equipped with the ability to sense that. While it’s important to hear what your Mortgage Originator is telling you, it’s equally important to listen to what they’re NOT telling you (read between the lines). Find someone who demonstrates they have your best interest in mind.
Are they Solution Oriented? Things can and do go wrong in the loan process. The appraisal may not come in at value. The underwriter may cut the borrower’s income based on something in the file. The credit score may drop. Guidelines can change overnight. Lenders can cut programs altogether… the list goes on. It’s critical to have a Mortgage Originator who is creative, who can come up with solutions and always has a backup plan. For example, I received a call from a 77 year old man who told me, “I don’t think you can help me. I’ve called three other lenders and they all said I there is nothing they can do, but I thought I’d give it one last try.” I said, “What’s the challenge?” He replied, “I’m 77, I’m self employed, I don’t show much income, I have 6 properties, and my debt ratio is way too high.” His problem was income. I asked, “Do you have any retirement accounts?” He said, “Yes, I have about $700K.” To make a long story short, I had him initiate monthly recurring disbursements from his retirement accounts in the necessary amount, which is an allowable source of income. Initially, he only wanted to refinance the home he lived in. When I showed him I could drop his rates on his other properties, shorten his terms, save him over $1,000 per month, and nearly $400K over the terms, he was overjoyed. No other lender had thought of that and we successfully closed his 4 loans. You need a Mortgage Originator who is solution oriented.
How committed are they to your satisfaction? In the 10+ years I’ve studied and trained salespeople, I’ve found that one of the common links among good salespeople is the drive to satisfy others. They find that helping others is very rewarding and will go the extra distance to make sure their customers are satisfied. We all know that when you do a good job for someone, they tell a few people. And when you do a poor job, they usually tell many more! You may not always know how committed they are to your satisfaction until you’re already in the process, but many times your instinct will tell you at that first phone call or meeting. You’re better off having someone committed to your satisfaction.
We all deserve the “best deal” out there. I hope I was able to share some insight so that when the time comes that you’re looking for the right mortgage, you’ll know what questions to ask. You can email me questions at justin@westernbancorp.com or give me a call at 916.899.6868
Thank you,
Justin Lees
Sales Manager
W.J. Bradley Mortgage, LLC
justin.lees@wjbradley.com
916.899.6868 direct
855.261.3713 fax
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