Mortgages in the general scheme of things should not be that complicated. It starts with the loan officer though, as I explained in Part 1 of this series. I really have never cared for the term sales or sales person, but that is what a loan officer is, a sales person. But the problem is that so many act as a sales person, wanting to sell you a mortgage. My biggest problem with this is that they should be educating you and helping you understand not only the process of getting a mortgage, but understanding your options. But so many just tell you what you want to hear. Besides, if you knew so much, you wouldn't need us, right?
Which brings me to part 2, understanding mortgages and loan programs. Much of this might be boring for the average borrower, but the more you understand, the more educated that you become, the more powerful of a borrower you become. Which is one thing that many loan officers fear, that of an educated borrower.
The understanding of mortgages? Again, this should be easy, yet it can be so complicated. Here is what I tell the consumer. Don't dwell on rate. Yes, you should shop for a good rate, but shopping for the best rate will usually result in a loan that either doesn't close or will close at a higher rate and or higher loan costs. Yes, this does happen and happens more often then you might think.
The average loan officer is so worried about telling you what you want to hear, just trying to get you into the door. They will worry about the problems that you might encounter later on. Unfortunately this should not take place, but it does.
My goal here is that you understand the basic process of obtaining a mortgage. Please read a part of this e-mail that I just received from a potential borrower that is trying to buy their first home in Connecticut.
"Hi Jeff,
oh yeah and i asked him for a good faith estimate several times and still have not received one, not to mention he barley ever picks up his phone. I think the only reason why i've stuck with him this long is because my real estate agent recommended him and said he would give me a really good rate"
Conclusion : My list should be different from your list. As a loan officer, I should be asking you :
- about your goals,
- what payment do you feel comfortable with,
- how much money do you have & how much of it do you want to use, and a few more questions
- and reviewing your credit, credit scores, and credit history
Your questions to me, as a borrower should be :
- what rates do you have to offer ( but this is a loaded question) If I don't ask the questions above, I shouldn't be giving you a rate no matter what. If you get a loan officer that volunteers a rate without asking all of those question and some more, then you need to seek another loan officer. I am dead serious about this. Not one of the questions.. not 2 of the 4... but all of them.
- can you please send me a good faith estimate ... Please read : did you get a good faith estimate? If your loan officer qualifies you for a mortgage, they should be giving you a GFE at the same time. If it's beyond 24 hours, that is a major red flag.
- do you think we can close in a timely manner. People ask this, hence why I am mentioning this. The normal turn around time should be about 30 days. If you have a loan officer that boasts that they can close your loan in under 2 weeks, even if you don't ask them, this should be a huge warning. Can it be done? Yes, but it's not advised even from the loan officers perspective. A very good, professional loan officer is going to keep your expectations to a certain level. Under promising and over delivering. The sad part is that it's usually the other way around,...... over promising and under delivering.
Important keys when shopping for a mortgage?
-- You need to understand how to read a good faith estimate. How to read a GFE.
-- You shouldn't be comparing the APR and the Rate. Please read : APR vs Mortgage Rate
-- Make sure you choose a loan officer that is professional. One that will get back to you in a reasonable time. Remember the borrower above, who said that he loan officer doesn't get back to her. Please read : Red Flags that a consumer should be aware of....
- FHA Loans - Conventional Loans - VA Loans -
Experience & Knowledge at its BEST !!!
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For more information on FHA loans, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!
Copyright © 2008 by Jeff Belonger
