by Douglas
Boncosky (excerpt from Create Wealth With Homeownership)
When deciding on which mortgage professional to
work with, take time to ask each prospective
professional the questions shown ahead.
Remember: just because someone is a mortgage
professional does not necessarily mean he/she is
a good one. So these four questions developed by
Sue Woodard of Mortgage Market Guide will help
you find a knowledgeable professional to work
with. The answers you get from each person you
interview may surprise you. If they don’t answer
correctly, go find another professional who can.
1) What are mortgage interest rates based on?
The only correct answer is: mortgage-backed
securities or mortgage bonds, NOT the 10-year
Treasury Note. While the 10-year Treasury Note
sometimes trends in the same direction as
mortgage bonds, it is not unusual to see them
move in completely opposite directions. DO NOT
work with a lender who has his/her eyes on the
wrong indicators.
2) What is the next economic report or event
that could cause interest rate movement?
Economic reports are released on an almost daily
basis by government agencies and other large
data reporting firms. This data can and does
impact interest rates by moving them higher or
lower on that given day. Therefore it’s
important you are working with a mortgage
professional who has access to an up-to-date
calendar of weekly economic reports or events
which may cause rates to fluctuate. Believe it
or not, not all mortgage professionals have
access to this information.
3) When the Chairman of the Federal Reserve
known as the Fed “changes rates,” what does this
mean, and what impact does this have on mortgage
interest rates?
The answer may surprise you. When the Fed makes
a move, they can change a rate called the “Fed
Funds Rate” or “Discount Rate.” These are both
very short-term rates that impact credit cards,
home equity credit lines, auto loans and the
like. On the day of the Fed move, mortgage rates
most often will actually move in the opposite
direction as the Fed change. This is due to the
dynamics within the financial markets in
response to inflation.
4) Do you have access to live, real-time,
mortgage bond quotes?
A mortgage professional you are working with
should be able to show you in real time on their
computer what is going on in the bond market so
you can get a feel for how the bond market
impacts mortgage rates. If a lender cannot
explain how mortgage bonds and interest rates
are moving in real-time and warn you in advance
of a costly intra-day price change, you are
talking with someone who is still reading
yesterday’s newspaper and is probably not a
professional to whom you can entrust your home
mortgage financing. Would you work with a
stockbroker who is only able to grab yesterday’s
paper to tell you how a stock traded yesterday,
but had no idea what the movement looks like at
the present time and what market conditions
could cause changes in the near future? No way!
To learn more about
finding the best mortgage professional, I am
providing you with some additional questions
that may be helpful:
How long have you been practicing?
If they have been in the business more than two
years, they should have the background and
knowledge to help you properly if they answered
the first four questions correctly.
Do you have any references?
This could be a tough one as clients of mortgage
professionals may be hesitant to talk with you.
But it certainly does not hurt to ask.
Do you have any testimonials?
Having written testimonials from clients is a
pretty good indicator of the level of service a
mortgage professional can provide. These are
often better than a verbal or face-to-face
reference.
Do you have a flyer outlining your services
and the type of long-term service you provide?
A good mortgage professional will write down and
promote the type and level of service he/she
believes in delivering to a client. They should
also have a personal website sharing details
about their practice and the services they
provide.
Do you have a client information
form/questionnaire for me to complete?
This will show you how serious the mortgage
professional is. He/she should want to know
details about you and your situation to help you
identify the right loan product.
The more the mortgage professional knows about
your short- and long-term financial goals, the
better he/she will be able to assist you in
developing a mortgage strategy.
Merely determining how much home you can afford
to buy and coming up with a down payment are not
enough. As you can see from reading this book,
you must take the time to find and work with a
knowledgeable, trustworthy, and confident
mortgage professional who will help you come up
with the most suitable mortgage strategy. He/she
must also be patient with your questions and
eager to educate you on the sometimes convoluted
issues regarding homebuying and ownership.
If you don't feel comfortable with a particular
person when interviewing him/her, you can always
walk away and find someone else. The
professional must be able to not only answer the
test questions clearly and correctly, but also
make you feel at ease during this complicated
and life-changing transaction. There should be
no sales pressure of any kind.
