Tips & Tricks

Many good people get bad loans every day because they are not educated, don't let it happen to you! Finding the lowest advertised rate in town does not mean you have found the best loan for you. Finding the lowest advertised rate usually means someone is trying to mislead you into thinking you can get something you can't. When you get a mortgage rate quote from most lenders it's typically 3 things:

This barely scratches the surface. What about points? Points are the most important and most misused factor in pricing loans and affect the rate tremendously! Unscrupulous lenders advertise ridiculous rates but they don't tell you until you're halfway into the sales job that the loan you're inquiring on requires that you pay 3 or 4 points. These lenders are the worst sort because they profit by telling you what you want to hear until it's too late.

Did anyone mention Closing Costs ? Rarely does anyone tell you their closing costs because they may contain points that are disguised as "Other Fees ". When Closing Costs are quoted (Low Flat Fee!) it is never with ALL of the other important factors such as Rate, Term, Loan Type, Points, Closing Costs, Prepay Penalties, etc. You can be sure you're paying for it somewhere and most likely overpaying because you want to believe you're actually saving money. The facts are that mortgage loans cost money to originate, process and complete.

Bottom Line: Mortgage loans are the largest and most complex transaction most people are likely to come across. Always ask the right questions, don't overpay for your loan and remember that anything too good to be true ALWAYS IS and will inevitably cost you more in the long run!

Questions to ask when you get a mortgage rate quote:

  1. What is the Interest Rate?
  2. Is the Interest Rate Fixed or Adjustable?
  3. If it's Fixed, how long does the rate remain Fixed?
  4. If it's an Adjustable Loan (or becomes an ARM after a certain # of years), what are the Index, Margin and Rate Caps?
  5. What Amortization (30, 20, 15 Yr, etc.)?
  6. How Many Points?
  7. Does it have a Balloon Payment?
  8. Does the loan have any Prepayment Penalties ?
  9. What are ALL of the Closing Costs?
  10. Does your quote include Prepaid Items?
  11. Can you lock the rate for the length of time it will take to complete the loan without any Lock Extension fees?
  12. What are the Rate Lock Terms and are there any Lock Fees ?
  13. Any other Up-Front Fees, Credit Report Fees , Application Fees, etc. ?
  14. What happens if I cancel? Are there any Cancellation Fees?

 

Why the variation in lender's advertised rates and fees?

Different ways of quoting rates and loan programs, Fixed or ARM, with or without points, different ways of accounting for closing costs and lock period as well as outright falsification accounts for the variations.

You're best off with someone you're comfortable working with whose rates and closing costs are competitive. We've heard from more than one client about their previous lenders promising them everything under the sun only to lose their rates, their loan and sometimes even their homes they were buying because of dishonesty, inaccessibility and ineptitude. Most have absolutely no recourse. Don't risk having anything like this happen to you during your most important financial transaction, your mortgage. Call today !!

Call us: 805-496-5415

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