Are you getting the best deal?
Posted by Travis Neliton on June 6, 2008 at 8:00pm
If you are looking for the best interest rates on a mortgage, it may be a bit misleading if you do not know what you are looking for. As much as you would think I watch rates all day, (actually Rebekah does that), there is not as much mystery to mortgage interest rates as you would think. Mortgages are bought and sold like stocks would be on the secondary market as mortgage backed securities.
There is no magical place to get the good rates and so often times when you see that rate that is too good to be true, well it probably is. I guess the easy comparison is if you were to buy Google stock, the price to buy that stock is what it is each day. You aren't going to find a super broker that is selling Google stock cheaper then market price just like you won't find a legitimate mortgage company locking rates that far outside the market or that much better than the next company down the road.
I will say that there is an opportunity to sell the mortgage backed security or interest rate at a higher premium then the secondary market is paying so you should be careful and have a trusted advisor in your mortgage planner before locking in.
There is not a week that passes where I do not have a realtor call me panicking because their client that they were not able to connect me comes to the closing table with a higher rate or much higher fees then they were promised or advised in a good faith estimate because of "market changes." This should not be happening and there should not be any surprises when it comes to something as important as creating the largest debt of your life.
There are two ways for a bank, broker, loan officer, etc to make a profit. Either through up front fees, a refund or rebate offered by the lender or a combination of both. Often there is confusion about what is better, a lower rate or lower fees. There is a technical and economic explanation to this but basically it comes down to you are either going to pay over time or upfront, there is no real "deal" or way to beat the system.
I would also suggest when you are working with a professional that IS creating the largest debt of your life, they have the credentials, certifications and education to be doing this. It shocks me the lack of interest or undeserved trust people hand over to random loan providers when refinancing or purchasing a home.
Unfortunately the barrier to entry in the mortgage profession is ridiculous. The state of Oregon has taken a few steps to ensure the people writing your loan at least are not felons and that they sit through about 20 hours of continuing education every 2 years, but all joking aside, that is it!
There are professional certifications out there in the mortgage industry but very few people make the effort to spend the money or go through the process. I have spent countless hours traveling, studying and updating my professional certifications through the Certified Mortgage Planning Specialist Institute, the National Association of Mortgage Brokers, and the Strategic Equity Group's certified mortgage planner process. As nice as it is to have CMPS, GMA, and CMP accolades behind my name, they are certifications I am proud to have, especially knowing the lack of interest and effort made by my peers in my profession. For example, the last I checked there were less than 50 CMPS certified mortgage planners in Oregon and over 2500 registered with the state of Oregon to write loans!
So before you go "rate" shopping on your next mortgage, think twice and take the time necessary needed to choose the right professional and mortgage that best serves your family as well as your short and long term financial goals.
An hour or two of planning upfront can have a huge financial impact on your lives and unfortunately the process is often minimized to researching and buying a DVD player.
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