Top 5 Questions you MUST ask when getting a mortgage?
1. What are mortgage interest rates based on?
Mortgage rates are based upon Mortgage Backed Securities or Mortgage Bonds, not the Treasury Note. While Treasury Notes sometimes trend 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 their eyes on the wrong indicators.
2. What is the next economic report or event that could cause interest rate movement? For an up to date calendar of weekly economic reports and events that may cause rates to fluctuate, email me to be added to my FREE weekly newsletter about the mortgage market.
3. When Bernanke and the Fed “change 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. For more information and explanation, just give us a call.
4. Do you have access to live, real time, mortgage bond quotes? 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 probably not a professional with whom to entrust your home mortgage financing.
5. How will this loan impact my financial goals? How do I know which loan is best with regard to how long I’ll be in the home? We believe that mortgage planning is essential to determine what loan program is best suited for your overall financial goals and the amount of time you expect to be in the home.
Be smart, ask questions! The lowest rate quote may not be the rate delivered, and even if it is, the lowest rate on the wrong loan can still cost you more money in the long run!
- Lending Laura