The Great Mortgage Rate Debate / 10 Tips for Choosing a Lender

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The one common denominator that all homes buyers love discussing is their mortgage rate.  Many home buyers shop on rate alone, and sometimes make poor decisions when choosing their lender.  The following ideas are important for every buyer to understand in order to make the best decision regarding their lender: 

1.     Get a referral for a lender. Better yet, ask a credible real estate agent who they trust.  It’s better to get a referral from an agent who may sell 40-50 homes per year and has done business with every local lender than a referral from Uncle Joe who buys a home every 7 years.  If a lender who I don’t know “burns” a buyer, they probably were never going to get any business from me anyway. However, if a lender I refer does a poor job for a client, they stand a great chance of never getting business from me again.  

2.     When comparing rates, compare the APR (Annual Percentage Rate). The APR makes the playing field level by accounting for all costs over the life of the loan, including, most importantly, closing costs.  Many buyers have been seduced by the appeal of a great rate only to get shocked at settlement with high and unexpected closing costs. 

3.     Pick a lender who will be at your closing.  I have been at many settlements where the mortgage never “funded”. This never happens when the lender is there. This is not fun when your moving truck is in front of the house, and the seller (rightfully so) won’t give you the keys. 

4.     Make one extra payment per year, on the anniversary of the loan.  This will cut a 30 year loan down to about 17 ½ years. 

5.     Better yet, get a 15 year loan.  Do you really want to be paying that loan off until you’re 70? 

 6.     If you are getting an Adjustable Rate Mortagge (ARM), make sure you’re really going to be in the home for that 3 or 5 year period. 

7.     Read the Good Faith Estimate provided by your lender.  By law, all possible closing costs are noted here. Question anything you do not understand. 

8.     One Stop Shopping may not be for you.  I am referring to where you get your loan from the same company which the agent works for. Then you get your title insurance through them as well.  What are the odds that the best services from 3 different industries are under one roof, and all work for the same parent company? 

9.     Ask your agent who they used.  If was good enough for them… 

10. Pick a Name You Trust.  Click here to link to our lender of choice. 

30-Year Fixed Mortgage Rates Since 1972

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