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Heather Foreman

How To Shop Around for a Mortgage Loan

October 20, 2021 by Heather Foreman

By: Lynn Ettinger

Home buyers who do mortgage loan shopping can avoid leaving money on the table.

Whether you’re shopping for new bed sheets or a new car, the drill is usually the same. Hit the reviews, check with friends, and scope out the best deal. After all, who wants to buy a car that racks up repair bills right away? Yet when picking a mortgage loan, borrowers don’t always think about comparison shopping.

In a Bankrate survey of recent home buyers, 12% of millennials said they believe their mortgage rates were too high. Some buyers may think that when mortgage rates are low, they don’t need to shop for the best offer. But even a few basis points can make a difference of thousands of dollars over the life of a loan, according to Bankrate, the Consumer Financial Protection Bureau, and the Federal Trade Commission.

You may think mortgage shopping is as enjoyable as prepping for a tax audit. It’s true that comparing home mortgages can get complicated. But you don’t need a finance degree to make an informed decision. Here are some steps to get there.

Find a Few Lenders

When looking for lenders to consider, loan officers recommend going to a few sources:

  • Locals you know and trust: “Make sure the lenders you’re comparing come from referrals from local people you know who’ve worked with them — like your friends or relatives,” advises Jeff Koch, vice president of residential lending at Draper & Kramer Mortgage Corp in Schaumburg, Ill. “Wherever you have trust established would be a good source.”
  • Your real estate agent: “If you’re working with a real estate agent, find out if they have any feedback or advice on a lender or a loan officer,” recommends Jim DeMarco, branch manager and senior loan advisor at Flagstar Bank in Seattle.
  • Online reviews: These can be a good starting point, DeMarco says. “If you see a lot of really good reviews, that means people are taking the time to provide them.”

Have an Intro Mortgage Loan Meeting

During a meet and greet, you and the loan officer will usually ask each other questions, and the loan officer will use that information to assess your qualifications. That may sound cut and dried, but the meeting should be fluid based on what you’re ready to do.

Typically, the loan officer would schedule a meeting focused on comparison shopping separately. If that sounds painful to borrowers who want to (literally) get moving, no problem, Koch says. “The borrower may be well versed and want to get right to what’s most relevant for them, which are the financial and comparison details. But a lot of people need to go over their own questions or cover key topics first.”

Want to meet virtually? “Some folks are just more comfortable virtually, and that’s OK,” DeMarco says. “I’ve closed loans with people I’ve never talked to on the phone. It’s all via text.”

Interview the Mortgage Loan Officer

Whichever way you choose, this meeting is prime time to interview the loan officer. Borrowers need to find someone who will be in there with them and who can problem solve. “We call unanticipated problems ‘icebergs,’” DeMarco says. “You think there’s smooth sailing. And then, suddenly, you smack into an iceberg.” 

Scope out the lender’s communication strategy and their process for delivering on time. “The process is highly complex, and you’d think professional lenders all would have mastered it. That’s not the case,” says Koch. “When a loan is not delivered on time, people’s finances and lives are basically balanced on the head of a pin, which is the closing date.”

To avoid problems, ask questions like these: 

Fact finding about the process:

  • Would you take me through the process?
  • What should I expect? 
  • What will I need to supply?

Compatibility with the loan officer or mortgage banker or broker:

  • What’s your communication style? Are you willing to communicate virtually?
  • When would I work with you? Are you available in the evening?
  • Will I be working with you or a member of your team?
  • What do you think of my time frame to get to closing?
  • What if any issue do you foresee being a problem?

Track record of loan officer and lender:

  • How long do loans you process typically take to close?
  • What are some ways you could expedite the process if there’s a tight time frame?
  • About what percentage of loans you work on close on time?
  • How many loans have you worked on that haven’t closed or haven’t met deadlines? 
  • What’s the biggest problem you’ve had with a loan and how did you fix it?

Use the Meeting to Learn

You can also use the meeting to clarify general info you’ve picked up online and talk about your concerns. DeMarco gives an example. “You may have switched careers or industries in the last year or started having bonus or commission income. Your research may have shown that you can just divide your salary by 12 to figure monthly income. But it may not be as simple as that.”

You’ll also want to bring up concerns like the impact on your credit score. Thirty-eight percent of buyers think comparing multiple mortgage offers in a short time will hurt their credit rating, according to a 2020 LendingTree survey. “As long as the lenders all pull the borrower’s credit within a couple of weeks, it’s counted as a single credit inquiry. So, it’s not a problem if they do it within a narrow band of time,” Koch explains.

Get and Compare Financial Information

Whether you’re looking at a federal form called a loan estimate or a precursor form called the fees worksheet, you’ll see a breakout of closing costs, explains Koch. “To compare the lender financials, you’ll want to drill down to origination charges in the lender section. Make sure you’re comparing apples to apples. If one lender is offering a 30-year fixed rate at 2.875% with no lender fees and another is offering 2. 75% with $1,500 in lender fees, those are unlike products. Get the fees at the same rate to find out who’s less expensive.”

6 Tips to Get Mortgage Loan Information

Comparison shopping can get complicated. Here are six ways to simplify the process.

1. Keep Your Pool Manageable

Mortgage shopping “depends on the borrower and the personality type and how they’re wired,” Koch says. “The process can seem overwhelming. That’s why it makes sense to have a select few options to compare so borrowers can process and assimilate them.”

2. Get a Fees Worksheet

The best way to compare effectively is to zero in on the fees worksheet, which the loan officer should provide. “You’ll be able to figure out just what the lender’s direct fees are, and you can make a nice, simple comparison.”

3. Understand a Fees Worksheet Versus a Loan Estimate

Keep in mind that the numbers on the worksheet are estimates and not locked in. Interest rates are fluid and change daily or even more often, DeMarco says. On the other hand, after you have a contract with a seller, “the loan estimate and loan application are where the information is binding barring structural changes to the loan,” Koch says. Make sure the information reflects previous discussions with and disclosures by the loan officer.

4. Be Careful Interpreting Third-Party Fees

Third-party fee estimates are included on the worksheet. Two lenders could each come up with different estimates for title, escrow, or appraisal fees, Koch explains. But not all are negotiable. For instance, the seller chooses the title company, so the lender doesn’t control the choice or the fees. The lender could be choosing the high or low end of a range, but it’s only an estimate.

5. Think About Timing

Make sure lenders are using the same time frame for locking in pricing and that it will extend through the closing, Koch notes. “A lender might offer a rate that’s a lock for three weeks, but if you anticipate or know your closing date will be five or six weeks out, that’s a problem.”

6. Consider Applying for Loan Approval Before Finding a Property

“Many lenders will not do this,” Koch says. “But some will allow borrowers to go through the formal underwriting process — not just preapproval — without having a property. The borrowers can get a bona fide mortgage commitment with all of the major buyer financials truly underwritten at that point. Then when borrowers make an offer, they can close more quickly.”

You’ll have to invest some time and effort into comparison shopping for a mortgage loan and selecting a lender and a loan officer. But your return on investment can pay off over the long haul.

https://www.houselogic.com for more articles like this

© Copyright 2021 NATIONAL ASSOCIATION OF REALTORS®

Filed Under: Uncategorized

Your Credit Score Opens the Door to Your New Home

October 14, 2021 by Heather Foreman

Although lenders will offer suggestions regarding increasing your credit score and your loan to value ratios,  when you don’t know where your need to be, how do you know when you get there?  This is especially the case now when your destination keeps changing.

Capital Economics, an analytics firm, expects the housing crisis to end this year, according to a report released March 16, 2012. One of the reasons: loosening credit.

They note the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Along with this, banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”  In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Here at Gauler Realty, we realize how specialized this information is and how it differs by lender and type of mortgage.  Give us a call and we will share current conditions with you and assist you through the process.   That is our expertise.  We look forward to meeting you.

Filed Under: Uncategorized

Are We at the Bottom Yet?

October 14, 2021 by Heather Foreman

Boy if I had the answer, I would be making a lot more money some place else than trying to give you my best thoughts below.  The one thing I do know is that it will be real clear when we see it in the rear view mirror.

The answer will vary considerably in price range and areas of the community you live in. Starting last fall the decline leveled off and today we are pretty stable.  For the last few months the number of sales increased and definitely above last year at the same time.  Prices continue to slip a little but not at the rate we have seen in the last couple years. But then again we have seen a month or two where the average price has gone up.

In a recent article, “Clear Capital sees signs of market stability as we move into the coming months.”

Further they said, “the median price paid for distressed properties has started to rise, indicating the REO market is seeing increased activity toward the upper end of the price range and helping to rein in the depreciating trend of the past several months.”

In Nevada, the number of REO homes coming on the market has dried up based on a recent NV Supreme Court decision regarding how the big banks handled foreclosures.  When this is resolved, we could see a flood on the market or based on some new proposed government programs, the banks might have to step back and provide better financing programs to the distressed home owners to prevent foreclosure. Only time will sort this mess out.

At the moment, I feel we are wallowing at or near the bottom, so I hope you do not see it in the rear view mirror. Contact us today and let’s review your specific needs and objective to see if the time is right for you.

Filed Under: Uncategorized

Property Management ALERT!

October 14, 2021 by Heather Foreman

How does your property management company show your property???

Don’t assume!  Most property management companies will give anyone with a drivers license and a $20.00 deposit the keys to your home.  They simply ask to see the house, and off they go alone…..to do whatever!

We ALWAYS show your home personally.  We ALWAYS watch out for you!

Filed Under: Uncategorized

Reputation or Relationship?

October 14, 2021 by Heather Foreman

Is it Reputation or simply Relationship that counts most when you choose a Realtor?

Very seldom does someone call me and say, “I’ve checked many realtors’ reputations and their accomplishments and have decided to give you my business.”   No, more likely it is, “You worked with my friend Mario and he said I should give you a call.”

What is happening here is, I have a good relationship with Mario, you have a good relationship with Mario, we will have a good relationship with each other based on that.  OK.

Why do I have a good relationship with Mario?  It isn’t because we both like rock climbing!  I seriously doubt it.  I’m pretty sure it is because I marketed and sold his house and helped him find a house that thrilled his growing family.  I did all this “with” Mario.   He was part of it all.

So the question still remains:  Reputation or Relationship?  Feels like both to me.

Filed Under: Uncategorized

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