What buyers SHOULD know

Shopping Around

I think I can get you the best deal, provide you with the best service and like so many others turn you into a very satisfied customer. However, if you want to look around, I want to help you do that wisely as well!

First, make sure you are working with an experienced, professional loan officer affliated with a credible institution. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way.

FTC Alert

According to the Federal Trade Commission (FTC), you may be signing on for trouble if a lender:

•   Encourages you to falsify your application information to get the loan.
•   Urges you to borrow more than you need.
•   Pushes you to accept payment terms that you can't realistically meet.
•   Fails to give you the required disclosures (e.g., APR, rescission rights,   etc.).
•   Shows up at closing with a totally different loan product than you agreed   to.
•   Asks you to sign blank forms. ("It'll speed things up. We'll fill in the   blanks later, trust me.")
•   Denies you copies of documents you signed.

Four Critical Questions

Here are four simple questions your lender must answer for you. If the lender can not answer these questions to your satisfaction, then move on to the next lender and keep at it until you find a lender that can.

What are mortgage interest rates based on?

The correct answer is Mortgage Backed Securities or Mortgage Bonds sold in the open market and NOT the 10-year Treasury Note. The reason for the confusion is because the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds. However, it is not unusual to see them move in opposite directions. I suggest you NOT work with a lender who has their eyes on the wrong indicators.

What is the next Economic Report or event that could cause interest rate movement?

A professional lender should always have an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate.

When Bernanke and the Fed "change rates", what does this mean... and what impact does this have on mortgage interest rates?

The answer may surprise you. When the Fed makes a move, they are changing a rate called the "Fed Funds Rate". This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets.

What is happening in the market today and what do you see in the near future?

If a lender cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are talking with someone who is still reading last week's newspaper, and probably not a professional with whom to entrust your home mortgage financing.

Be smart... Ask questions... Get answers!

'Four Critical Questions" Source: adapted from www.suewoodard.com