There are so many mortgage products available today; you’ve got to have a mortgage professional that will work for you and look out for your best interests. Protecting your best interests means providing you not only with the right questions to ask, but also comprehensible answers – and that’s what I’m here to do.
Let me tell you – I’ve heard all the stories about how people feel cheated when they get to the closing. The worst case scenarios are not that uncommon. At the core of all these tales are mortgage lenders or brokers who had purely selfish motives and truly didn’t care about the client’s needs.
I know of too many situations where lenders or brokers have put consumers into high cost, high fee, high interest rate loans that end up costing them several thousands of dollars they needlessly had to pay.
I also know many cases where people become so upset and angry when they get to the closing and the closing costs and interest rate are not what they were quoted…but now they feel stuck with it. So, they go ahead and close and regret it every minute. Is it at all surprising that the mortgage broker doesn’t show up at the closing?
I’ve heard many stories of people selling their homes only to find out they have a prepayment penalty on their mortgage that they were never informed about. They have a sales contract, and they’ve bought another house, or are relocating – or any number of other reasons where they have to follow through with the sale. But because of the prepayment penalty it will cost them several thousand dollars of their profit to pay off the penalty to the lender.
I know of lenders and mortgage companies who put consumers into ARM (adjustable rate mortgage) loan programs with prepayment penalties and the loans adjust upward after the 1st month, or 3 months, or 6 months. All of a sudden the payment has gone up so high the homeowner find themselves in financial difficulty of not being able to make the payment.
The homeowner then tries to refinance into a lower interest rate loan only to find out that he has a huge prepayment penalty of 6 months of interest that he has to pay to the lender and that fact alone makes it completely unaffordable for him to refinance. So now the homeowner is stuck in a very bad situation he can’t get out of!
Do you wonder if you have a pre-payment penalty on your mortgage? If you go to pay it off and you’re not aware you have one, let me just say, you’re in for a big shock! Everyone hates pre-payment penalties but…do you know there are ways a pre-payment penalty can benefit you? I’ll tell you how!!
Ever wonder why one bank or broker quotes you an interest rate of 7.0%, and another bank or broker quotes you a rate of 7.750%, and yet another quotes you a rate of 6.750%? How does that happen?? Why the difference? I’ll explain it to you!
Have you ever spoken to a bank or broker & they quote you a very low rate that you didn’t think you could ever get – a rate that defies your internal logic? I know you’ve seen the television ads I’m referring to – many such promotions are examples of “bait and switch” advertising.
Suffice it to say, they’re not telling you what you need to know: You can bet they’re charging you a couple of “% points” up front. Make sure you know what your being quoted & why. I’ll help you determine what’s right for you!
Do you know the difference between ‘points’ and ‘no points’? Do you know that paying points can benefit you?
Every situation is different and paying points up front may save you several thousands of $$ over the term of your loan. I’ll show you how to know the difference!
What’s a 1% loan anyway? How on earth can a lender offer you a 1% interest rate? Is it too good to be true? I can give you the answers you need to know.
How do you know if you should refinance or not? Just because you’ve been told you can get a lower interest rate doesn’t mean you should refinance. Learn what you need to know to determine if you should refinance or not. I’ll tell you how to figure it out!
Do you know what “break even point” means? This is an essential point you must know before you refinance. I’ll explain it to you!
Escrow or no escrow – what’s the best way to go? How do you know if you should escrow your taxes and insurance or not? The month of the year that you get your loan can make a huge difference in financing your escrow amounts. I’ll explain it to you!
Interest-only or not Interest-only,15-yr term, 20-yr term, 30-yr term, 40-year term, even a 50-yr term; how do you know what the best loan term is for you? I’ll help you figure it out.
Good faith estimate and closing cost quote. Why is one a few thousand dollars less than another one for the same loan? How can that be?? I’ll tell you why!!
No income or No Documentation, Stated Income or Full Documentation; what’s the difference…and more importantly, how do I know which one to do? How does it affect my loan approval & Interest rate?
You need straight, easy-to-understand answers to those questions, as well as the others that I hear each and every day:
Closing Costs or No Closing Costs?
Seller paid closing costs – what are they?
Financing your closing costs – what’s the benefit & what’s the cost?
100% Financing – how do I do that?
80/20 Loans – what does that mean?
What is PMI or MI and does it benefit me…or not?
Should you have PMI on your loan or should you do a loan without PMI?
If you have PMI on your mortgage loan what do you do to get rid of it? If you do have it, is it tax deductible or not?
Do you know what you can deduct from your income taxes? What does “buying the interest rate down” mean and how does it work? Can you benefit from doing that? I’ll tell you when you should do it and what it will cost you.
Here’s another question I answer every single day, usually more than once: “What’s a Home Equity Line of Credit and should I have one? What kind should I get?” The answer is simple: I think everyone that owns a home should have a line of credit – and I’ll tell you why!
Credit Scoring – now here’s a whole different animal altogether; 500, 600, 700, or 800…what’s your credit score? How is your score calculated and how does it work? Why are credit scores so different?
“What can I do to improve my credit score?” Suzy Orman gives some good and some very bad advice to people. I’ve heard her talk about a 1% line of credit – there’s no such thing.
Late payments or late fees – what’s the difference?
Old credit, bad credit, or no credit – what can you do about it?
Should you pay off collections, judgments and charge offs? “How do I know what to pay and how much to pay?” Everyone goes crazy trying to figure out credit scoring and what to do to fix their credit.
I can give you a few very simple suggestions that can increase your credit scores 30-40 points in about 30 days!
I could go on and on with more volatile situations, and questions, concerns and critical things you need to know when doing a mortgage transaction. I think I’ve made my point: you need to have a mortgage professional you can trust.
All of these situations and concerns can be overcome if only the consumer had a level of comfort and trust with the mortgage lender or broker they choose to work with.
There are situations for every type of loan program I’ve mentioned, and they all have their intended purpose, but you have to be aware of the type of loan program, the reason your choosing that particular loan program, and its costs and benefits before you go through with the financing. Most consumers don’t know enough about the nuances of the mortgage lending industry to be able to avoid the pitfalls that many homeowners fall into.
The consumer needs to know the few simple questions to ask and the important things to lookout for; then they would be in the correct loan program for them to cover their current living situation.
The most important advice I can give you is this: Do not deal with a person or company that you may never speak with again for the rest of your life. Home mortgage financing is one of the largest financial transactions that you will make and deal with over the course of your life. Work with someone you can trust!
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Let’s use a set of analogous questions to discover the best way to set about finding the perfect mortgage for you. Just answer these questions for me:
Would you trust a person that called you on the phone and didn’t know a thing about you, to perform brain surgery on you?
Would you trust them to give you financial advice over the phone?
Would you trust them to tell you how much money to take out of your bank account and make a payment to them?
Hopefully, you answered each of these with a resounding “No”!
Don’t put your financial life in the hands of someone who doesn’t know you well enough to make rational decisions on your behalf.
Why would you want to work with a complete stranger on the largest financial transaction you’ll make in your lifetime – when you can take the time to do it right?
The right way, the best way to get straight-forward answers to the questions I’ve outlined is to ally yourself with someone over the long-haul: a mortgage broker you can trust to work for your best interests.
Trust, of course, is developed over time – not through one or two phone conversations.
Avoid problems in the future – start today, start right now, to build a solid relationship with a mortgage broker you can rely on for years to come.
About the Author: Robbie Hopcraft is an experienced mortgage broker, living in Key West, Florida. You can learn more about his expertise at http://www.robbiehopcraft.com and http://www.myloanapproved.com