The Person – Choosing a Mortgage Professional or Broker
As evidenced by numerous mortgage financing horror stories, one of the most important decisions is choosing the professional you want as your advisor, consultant and coordinator of the financing process. This is most likely the largest financial transaction of your life and it is far too important to place into the hands of someone who is not capable of advising you properly, as well as troubleshooting any issues that may arise along the way. But how can you tell?
Below are five simple questions a mortgage professional should have the ability to answer without hesitation. If they do not know the answers… run… don't walk, to a lender that does!
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 mortgage professional or broker who has their eyes on the wrong indicators.
What is the Next Economic Report or Event that Could Cause Interest Rate Movement?
A mortgage professional will have this at their fingertips. Each week various economic reports are scheduled for release. Locking before or after these reports could make a significant difference in your mortgage interest rate.
What is Happening in the Market Today and in the Near Future?
If a lender cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well the near term trend, you are talking with someone who is still reading last week's newspaper and probably not a professional with whom to entrust your home mortgage financing.
When Dr. 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 are changing a rate called the "Fed Funds Rate." This is a very short-term rate that affects equity lines, credit cards, credit lines, auto loans and the like. Long term mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets. For more information and explanation, just give us a call.
What Professional Certifications do you Hold?
Fewer than 5% of mortgage originators ever earn professional designations such as CMPS® or CMB™. These designations require extensive coursework and passing a qualifying exam before they are granted. Would you let a surgeon who wasn’t board-certified operate on you?
About the Author - Kabir Mahadeva
Kabir Mahadeva helps clients to create and preserve wealth by integrating their mortgage with their overall financial plan. As a Certified Mortgage Planning Specialist®, he is one of a very select number of professionals who have earned advanced certification in assisting clients to achieve financial goals including funding retirement, paying for college, optimizing cash flow, reducing tax costs, and increasing net worth. Click here to read more about Kabir Mahadeva.
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