HERE ARE FOUR SIMPLE QUESTIONS your Loan Officer absolutely MUST be able to answer CORRECTLY. IF THEY DO NOT KNOW THE ANSWERS - RUN, DON’T WALK RUN TO A LENDER THAT DOES!
1) 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 lender who has their eyes on the wrong indicators.)
2) What is the next Economic Report or event that could cause interest rate movement? (A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate.
3) When the Fed “changes 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 impacts credit cards, credit lines, auto loans and the like. 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)
4) What is happening in the market today and what do you see in the near future? (If a lender cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, 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.)
One additional important aspect, is also understanding that not all Loan Officers are licensed. Be sure to only work with a licensed professional. You can verify a Loan Officer has a license by going to www.NMLSconsumerAccess.org
Be Smart… Ask Questions, and Get Answers!
(C) 2011 - Joe Metzler - Mortgages Unlimited, St Paul, MN #274132. ReRe-blog but do not steal!