Mortgage and Interest Rate Facts: what you need to know before you get a loan
I am often surprised to see someone cross a street without looking both ways. In the same way, I’d like to detail some basic facts of life that you may have heard.
THERE IS NO FREE LUNCH
TREAT OTHERS AS YOU WOULD LIKE TO BE TREATED
IF IT SEEMS TOO GOOD TO BE TRUE, THEN IT PROBABLY IS
NOTHING IS A BARGAIN IF YOU DON’T RECEIVE WHAT WAS PROMISED
Rate shoppers are vulnerable to inaccurate interest rate quotes, price quotes and service promises. There are unfortunately many fees to any loan and most will not be revealed during a rate shopping phone call. Your loan is serious business that should include LIFETIME service. It begins a relationship that can serve you well long after your loan is funded. It may be more valuable to pay a little more in rate than to be old news when much later, you need a copy of your closing statement or advice on how to determine interest paid for taxes.
These days, the rules are different. At the beginning of every quarter, we are allowed to change our compensation with each institution we deal with. It is a percentage. Doesn’t matter if the dollar amount is large or small. We treat them all the same because it all evens out over a career. You meet people and if they like how you conduct business they may refer business to you.
All lenders are in business to make money, but how they behave has more to do with how they feel about themselves than what is best or fair to you. If you are buying a home, get your loan approved before you even shop for a home. You can get a pre-approval even if you are self-employed. If you are looking for a competitive fixed rate loan or higher loan to value (more that 80% of the purchase price), then you may need tax returns or W-2’s, pay stubs, etc. If you are putting down 20% of the purchase price or more, and you have decent credit. Rates change daily, sometimes more than once the same day. Trying to float a rate (not lock) until you can be certain of the closing date can be nerve racking. Rates go in cycles. Another alternative is a short term fixed, like a 3, 5, or 7 year fixed period followed by an adjustable period. Whatever you do, follow these rules;
UNLESS YOU ARE EXTREMELY SURE THAT YOU WILL KEEP THE HOME OR THE LOAN FOR MORE THAN FIVE YEARS, INVEST AS LITTLE AS POSSIBLE IN “POINTS”. POINTS ARE PRE-PAID INTEREST TO BUY A LOWER RATE AND AREN’T WORTH IT IF YOU DON’T KEEP THE LOAN LONG ENOUGH TO RE-COUPE THE EXTRA COST. BE CAREFUL OF COSTS!
ONCE YOUR LOAN HAS BEEN APPROVED, AND IF TIME PERMITS, TRY TO GET A COPY OF THE LOAN DOCUMENTS TO REVIEW IN ADVANCE. ON REFINANCES YOU HAVE THREE DAYS TO CHANGE YOUR MIND AFTER SIGNING BUT IN A PURCHASE THERE ISN’T A RECISION PERIOD. CHECK THE TERM, RATE, AND PAYMENT BEFORE SIGNING.
The sad truth is that some people will try to take advantage of others. A real estate loan is a big deal. Take your time to do it right.
Our Lending Services
We will be happy to chat with you as long as you wish. You can reach us very easily. My job is to educate you to make the best decision that suits your needs. I will ask you a lot of questions. You can ask me even more. THE MORE YOU KNOW, THE BETTER IT IS FOR BOTH OF US.
The loan process is as follows;
1. Consultation: talk to us about what you want and who you are.
2. Application: mostly signing paper, a few easy questions.
3. Processing: we order credit report, appraisal, and title report.
4. Submission: we send your package to the source that offers what you want.
5. Approval with conditions: believe me, there’s almost always something.
6. More processing, order insurance.
7. Locking the program or rate: this step can occur earlier if appropriate to your needs.
8. Ordering loan documents
9. Signing loan documents: done with a notary, often at an escrow company.
10. Funding: the Lender wires the funds to the closing agent.
11. Closing: your loan documents are recorded and funds are distributed.
Normal turn around time is thirty days but can go faster or slower depending on circumstances. Rates can be locked anytime, but better pricing is available after approval. We must honor locks with our lenders.
We earn our fees by counseling you to find the best fit to your individual needs and then preparing and shepherding your application through the process. It is a very creative occupation that seeks to overcome issues as we go along. Certainly, there are easier loans and harder loans. We do whatever it takes to get the job done as quickly as possible. We would rather quote high and deliver low, estimate longer, and get done sooner, and manage your expectations so that we are realistic and you are not disappointed. It isn’t that hard if one is determined to be good. And it pays us great dividends in repeat and referral business.
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