Cori\’s Test Blog

10 Mortgage Facts You Do And Don’t Need To Know

I am speaking to the consumer now. Many of the bloggers on line like to talk technical. Not to be too critical, but some loan officers are good at many things other than what is important. Much of the technical talk about the fed, Ben Bernake, and the like are really not important to you the borrower. So here is my list. My goal here is to help you not get confused and be focused on the most important facts in what can be an overwhelming experience, buying a home.

I see that my job here is to help you keep your lender on target. That means make a good decision on your loan.

Facts you either don’t need to know or do need to know.

1. What is the mortgage interest rate based on? You don’t need to know this. If your lender gets into this with you ask them to get back to getting your loan completed.

2. What is the next Economic Report or event that could cause the interest rate movement. If you get into this, be concerned. Your lender may be coaxing you to float. If you have followed our blogs for a time you will know that I have shown you rarely come out much ahead by floating and you take a serious risk of losing, even losing the ability to buy. Review this article. I have employed hundreds of loan officers and worked with hundreds more. Most think they are bright when it comes to where rates are going. Sadly, most of the time they are wrong, and many times they are gambling with your rate. I say you don’t need to know this, you are safest in knowing how fast can you lock.

3. Would you like me to give you a document saying you are locked, at what rate and at what cost or fees? This is a yes. Always. Not sometimes. Not tomorrow. Now. Always. Yes you do want to know this.

4. Would you like to know how much it costs to get a lower rate? Yes again. You should know how much it costs in fees to get a lower rate. You also need to know the difference in payment and the difference in fees. You want to see how long it takes to break even. For example: You might buy a lower rate if for $4000 you could save $100 per month on a 30 year fixed rate loan. That would pay back your $4000 in 40 months, a not impossible situation.

5. Would you like to know how much it costs to get a lower closing cost? Yes again. Why? Same as in the example above in reverse. You might be wiser to pay a higher rate for a lower fee. Take note, there is almost always a higher rate that gives you a loan with no closing costs.

6. Would you like to know what Ben Bernake is doing? No, unless you are related. Similar reasons to those above. Please, you cannot be an expert and I promise you your lender isn’t.

7. Should you know what it means if the Fed is raising their rates? Only if you were suckered into floating. So I say No to this.

8. Should you know what is happening in the market today? Are you buying a rate or buying a stock? They are different. You aren’t a day trader. You are going to live with this rate for months or years, unless you are fortunate enough to have a large drop in rates. Guess what? If that happens you simply refi.

9. Would you like me to give you references of satisfied customers? That is a yes I require that.

10. Would you like me to run your credit report? That is a yes once you are satisfied to number 9.