There are tons of first time homebuyers out there negotiating the best deal on their new home, and now it's time to get a mortgage.
Most of them only know how to ask one question: What's the Rate?
We've been in the mortgage business for over 20 years - and the only thing most people know to ask is - "What's the Rate?"
While that's a great question, it's kinda' like going into a shoe store and asking if they have any shoes in a size 9. Just shopping the rate is not necessarily going to get you the best price.
And what is the best price anyway!?! Most of the clients that call us speak to my husband, Steve. The first thing he ALWAYS says is, "hey, thanks for calling! So you were referred to us by (insert name of friend, co-worker, agent, builder)? That's great!
So, tell me a little bit about what you're trying to do."
I share an office with him - and after listening to him say this for like the 90th time I turned and looked at him saying, "THEY WANT TO BUY A FREAKIN" HOUSE!" He wasn't amused.... but once calmed down he explained to me why he askes that question, that way (and why it will help you when shopping for a loan).
Most clients answer the question of what they are trying to do one of these ways...
- They want to buy or refinance but keep their payments at a certain amount
- They want to buy or refinance but they don't have a ton of cash to work with
- They want to buy or refinance but they can't verify all of their income
- They want to buy or refinance but they need it to happen in like 5 days
- They want to buy or refinance but they think they have some credit issues
Each of these items will help the loan officer determine which mortgage program (like those different kinds of shoes) will work for you! The PROGRAM will then help us get to a mortgage interest rate... and knowing your credit score and how much money you want to part with for closing costs will determine your rate.
So let's assume you figured out which program you are going to use to finance your home - YIPPEE! One more step in the process! Now you can just call loan officers and ask for their rate on that program and those terms with your credit and compare - it's not even that easy!
You want to be certain that you are working with an experienced loan officer. The largest fianancial transaction of your life is far too important to place into the hands of someone who is not capable of doing more than just quoting you a rate.
So here are some other questions for your loan officer:
What's the next Economic Report coming out that might effect the direction of Mortgage Interest Rates? A seasoned loan officer will have this information at their finger tips, and will know, for instance, that the FED says it will slowly stop purchasing Mortgage Backed Securities, which could cause rates to go up...
When Bernanke and the Fed "change rates," what does this mean... and what impact does this have on mortgage interest rates? The answer is not obvious. The Fed has some impact over SHORT TERM rates, like those on your credit cards, however very little actions the Fed takes (especially recently) has created a lower movement of Mortgage Bonds. Because of the "bad name" associated with Mortgage Bonds in the SubPrime market, fewer people are purchasing these bonds... That's why it's important to note that the Fed says it will slowly stop purchasing Mortgage Backed Securities (If you have other questions about this just call us!)
Once you believe that you are working with a seasoned loan officer, there are other points to consider... If you talk to 3 lenders who all tell you the rates are at 5.25% and you talk to another person who says they are at 5%... well, you've got to question what that lower priced lender is doing. For the most part, rates are rates. The cost of money is pretty close to even across the board - so, if it sounds too good to be true, it probably is. There could be extra fees, or they could be quoting a rate that is only good for the next 12 days.
You get what you pay for! If you are looking for the cheapest deal out there, understand that you are placing a highly important process into the hands of the lowest bidder. (If you've ever had a cheap haircolor job or a cheap haircut, cheap pair of shoes that KILLED your feet or fell apart - you know what I mean).
All too often, you don't know until it's too late that the cheapest isn't BEST. Remember that missed closing dates in NC can now mean a FINE to the buyer. Most "internet companies" do not operate in the State of North Carolina and do not know our laws - or even how we close loans.
If someone mentions closing at the Title Company - you know you're dealing with someone who's not from here, and some delays and differences in quoted closing costs and actual closing costs will likely occur.
Understand that Interest Rates and Closing Costs go Hand in Hand. When someone asks me for a rate - I ask them which one they want. I'm not being sarcastic (well, okay maybe a little) but we have interest rates from 2% to 10%. It depends on the program and the amount of money you want to pay out of your pocket.
Many first time homebuyers want the smallest amount of closing costs (so they can buy a hot new leather sofa!) and will therefore take a slightly higher interest rate - so that the lender pays the closing costs. A professional lender will be able to offer the bst advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.
So our advice is to be smart. Ask questions... but don't just ask what the rate is!
Call Steve and Eleanor Thorne with First Financial Services in Cary, NC. Call us at 919-649-5058. We've been mortgage Lenders in North Carolina with the best mortgage rates for decades!