Shopping Around For A Mortgage
Here’s the inside scoop on how to do it right!
First: Are you working with a TRUE Mortgage Professional?
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. But how can you tell? If your shopping just rates, seriously consider the fact that the lowest bidder is handling the largest debt you will likely ever take on.
The following 4 simple questions are ones that your lender must be able to accurately answer. If they can’t run, don’t walk away.
- What are mortgage interest rates based on?
The only 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.
- What is the next Economic Report or event that could cause interest rate movement?
A professional lender will have this at their fingertips. They should not only be able to tell you the next major economic report, but how it might affect interest rates.
- When Janet Yellen 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 at which banks lend to each other. The “Prime Rate” is what impact consumers and is always 3% above the Fed Funds Rate. The Prime Rate impacts credit cards and home equity lines of credit. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets. For more information and explanation, just give me a call.
- 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!
More than likely, this is one of the largest and most important financial transactions you will ever make. You might get a mortgage only four or five times in your entire life… but we do this every single day. It’s your home and your future. It’s our profession and our passion. We’re ready to work for your best interest!
For answers to these questions and more give me a call at (314) 472-DOUG (3684)