In order to accurately compare loans from different lenders
you need to: get a quote on the same day, on the same loan program & for
the same interest rate. Given all three of those being constant,
compare who has the lowest lender fees.
Interest rates can change multiple times
per business day. They also vary depending on the specifics of your
loan. Rates are based on a base loan amount of $150,000 (Jumbo's based
on loan amount of $325,000 and APR's based on 20% down payment).
How interest rates are set:
The number one question we receive is, "Please give me your best
rate quote", or something similar to that. If you choose
a lender based solely on the best rate quote, you're likely to get a big
surprise later. There are thousands of lenders out there, but the truth is,
mortgage rates, especially with fixed type loans, vary only slightly from
company to company. Rates between legitimate companies usually vary no
more than 1/8% for the same overall cost. Why is that? Banks, mortgage
brokers and mortgage bankers get their funds from the same secondary market
sources. Simply put, the cost of money is dictated by these sources
with rates changing one or more times per day--like stocks. Most
people think you shop for a loan like you would for a car. Reading the
paper for quotes doesn't work because the information is old by the time it
gets in front of your face. There are some advertisements that do
quote slightly lower rates. At best, they lock the rate for a very short
period of time, during which time you must close. This is usually 10 days.
If you can't do it--you've lost the rate. Any lender, us included, can quote
a slightly lower rate on a "short lock". Many other lenders do not
lock until the loan is approved. While waiting for the approval, your rate
is likely to change. Most of these types of lenders tend to have high
"garbage fees" in exchange for being able to quote lower points or
rates. Low or no points with high fees is not a good deal at all, but
many borrowers don't ask the right questions and focus only on the rate. And
garbage fees are not deductible, whereas points are, making the effective
rate even higher under those circumstances. Adding a prepayment
penalty can also lower the rate slightly. Again, most borrowers focus
only on the rate, not the mathematics. Think MATH. The APR (annual
percentage rate) can be used as a guide. The lowest APR may NOT be the best
deal for you, however. Also, lenders are inclined to figure APR differently.
With mortgage money, there are other factors to consider such as expected
length of stay in your home, tax implications, opportunity cost, etc. The
real cost of your mortgage is a combination of rate, loan points, other fees
and actual terms, not one or the other and ONLY as it applies to YOU! Only
work with a professional loan officer who knows the math.
There is generally only around 1/4% gross profit in mortgage money.
That's it. If that is the case, how can there be a lender at 7% when
everyone else is at 7.5% for the same TOTAL cost, on the same day? The
answer is, there isn't. The quote is designed to get you to
apply. Later on, when it comes time to lock in your rate, you'll get
what everyone else has (or higher), but they still got your business, didn't
they? A rate quoted may be for that day only and cannot be locked
in. You don't need any special education to start selling mortgages.
Having the title of "loan officer" does not automatically mean
you're good at it. I'm sure you've heard the horror stories. We hear several
every week and sometimes end up jumping in at the last minute to save
someone's transaction. Most home loan applicants fail to shop
correctly. The more lenders they talk to, the more they get
confused. So, what do you do? Once you weed out the people that
are obviously on the high OR are lower than everybody else, choose someone
that's competitive and that you trust. Ask for meaningful references
such as CPA's or Realtors. Don't gamble with something as important as
your mortgage. Please take a look at our business
philosophy, then decide.
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A "FREE" REFINANCE??
Here's how: Simply
put, a higher interest rate generates more commissions for the lender which
are used to pay all of the refinancing costs. So, we can drop your payments WITHOUT
affecting what you owe and without any costs. Hey, why give it to the
bank? There are no hidden costs either! Use this refinancing
technique to dump your adjustable loan too. Get into the safety of a fixed
rate before they go up again. Of course, lower rates are available
with costs as well. Normal qualifying parameters apply. So what
if rates drop later?? So what! It didn't cost you anything in
the first place, right? You can do it again at those prices. Planning on
moving in the next few years? Refinance into a 3, 5, or 7 year fixed
rate and save $$ before you move! Use our on-line
application. You can also call us at (509)847-2090 or
send us an e-mail at info@spokanemortgage.com.
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QUESTIONS AND ANSWERS
QUESTION: "I'm not sure now is a good time to
buy. When is the best time to buy a home? Is there some
formula?"
ANSWER: Your question is a good one, but pretty
broad. There are a number of factors to consider when buying a
home. There are tax issues, long and short term goals, property
location, financial considerations and quality of life issues. Only a
few people are qualified to offer reliable advice in these areas. Some
people in the financial field are better qualified than others, believe
me. Just like in lending, there are great loan officers and there are
jerks who sound like they know what the are doing, but don't. Surround
yourself with good people when making a decision like this. Include a
CPA, loan officer and friends with experience in these matters. DON'T
get somebody out of the newspaper or off of some flyer without getting
references. The best references are CPA's, attorneys and Realtors.
QUESTION: "Is there anything I can do if I have
no equity in my property? Are there refinances available?
ANSWER: That's a problem with some homeowners.
If your loan balance equals your property value (no equity), there ARE
refinancing programs available. If your balance exceeds your value,
you may have to come in with cash to close unless you're willing to take a
high rate. Many times that just isn't worth it unless your current
loan really stinks. Some people "walk" from their
properties, feeling that there's no point on paying for a losing
investment. Other people opt to negotiate a "short sale". or
"short pay". This is when your current lender agrees to
accept a smaller amount of money than what is owed upon sale of the
property. There are some problems with this, however. Depending on
your lender, they may not agree to a short sale. When a customer is
paying on time, they figure, why should they accept a smaller payoff of
their loan balance? Homeowners sometimes resort to making late
payments so as to get the lender to agree to a short sale, if they do at
all. This tactic will definitely wreck your credit. Believe it
or not, a short sale mixed with mortgage lates is a lot worse than the short
sale itself. I mean for your future credit rating, a short sale is
almost like a foreclosure to many lenders. Even so, adding mortgage
lates to that is the worst thing you can do credit wise. Sure, you can
get a loan, but the rate won't make you very happy. But alas,
sometimes there is no other way. But remember, this credit will stay
with you for several years and may very well affect your ability to get a
good loan in the future, no matter how much money you make or have in the
bank. One word of advice. Get an attorney who deals with short
pays.
QUESTION: "Why do I need an appraisal if I want
to buy and the seller wants to sell? We know the price is fair."
ANSWER: Just because you want to buy a property for,
let's say $500,000, doesn't mean that the bank will make a loan based on
that amount. There are many reasons why. A lender always looks
at a transaction thinking, what if we have to take this property back?
What if there's a $400,000 loan against it and it was really only worth
$375,000? OK, what if it really IS worth $500,000. And no, they don't want
to take your property back. Banks are regulated and audited. They are
not in the business of making loans so they can take properties back.
Every time they do, it's a big negative mark on their record. Too many
negative marks say to the regulatory bodies that this bank doesn't know how
to make real estate loans. That's not good if the bank wants to keep
it's doors open.
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