SHOPPING FOR A HOME LOAN???

How Do I Get The Best Rate?

It is NEVER about the best rate. It is about the best MATH, period.

There is NO other answer than that. So why isn't the lowest rate the best deal? First, lower Rates come with more Points and Fees. That's not the real issue either. There is a break even point to contend with when paying Points and Fees, Tax Deductions to figure out and your available cash. In the case of a Purchase Home Loan, Points are Tax Deductible in the year that you pay them. That is good, but then again, so is the interest you think you are saving. With Refinances, the Points are usually only deductible over the full term of the Home Loan. That could be 30 years, making the benefits and the break even point years down the road.

So why do so many Lenders advertise really Low Rates with all of those Points and Fees? Because they know most consumers look at the Rate, not the math. That advertising strategy works really well. How about the lowest APR? Often, the more Points you pay, the lower the rate and APR. True, but not the answer. Get your loan officer to take apart each rate and fee quote to find out what the best MATH is for you, period. It only takes a few seconds for a professional to do it. After that, it's your decision.

What Causes Mortgage Rates To Change?

Did you know that one or more Rate changes per day is normal? Actually, it is unusual not to have at least one Rate change in a day.

Most people do not know that. Rate quotes can change when you call back later that same day. In the Lending Business, a rate change can also include a change in the Point cost for the same rate. In other words, a rate can be no Points in the morning, then later that day cost ¼ point. That is a rate change to Lenders.

Did you also know that Home Loan rates are not directly affected by what Ben Bernanke does? Many times a Fed Rate cut can cause Home Loan rates to go up. Home Loan rates based on Mortgage Backed Securities or Mortgage Bonds and primarily change as a result of: 1) the perception of inflation, 2) times of uncertainty and 3) the movement of money in and out of the stock market--that's it. When a piece of economic data shows weakness or uncertainty in the economy, rates tend to fall. The opposite is also true. A drop in the Unemployment Rate, a rise in Durable Goods Orders, a rise in the Consumer Confidence Index--rates go up. These influencing factors can present themselves at any time, many without warning, affecting Home Loan Rates instantly. There is no "delay". It doesn't take time to "filter down" like some people think. Reading the paper for quotes doesn't really work because the information is old by the time you read it. Radio, TV and billboards are not the answer because the details are always missing. They just want to get you on the phone. Competitive lenders can deliver nearly identical rates to each other. Most Borrowers don't ask the right questions and focus only on the interest rate.

Try to think MATH and as it pertains to you. That's all that matters.

What are Mortgage Interest Rates Based on?

I have heard it over and over; people in the financial media presenting information on the Bond Markets continually make erroneous assumptions about the relationship of Mortgage Interest Rates with US Treasury Bond and Note prices. This happens because these Financial Reporters may understand the Bond Markets in general but they are not Mortgage experts and do not fully understand how Mortgage Interest Rates are determined. For example, the Bond Market Reporters mistakenly tie mortgage rates to the performance of the US 10-year Treasury Note on a routine basis. You see this happen all the time. In reality, Mortgage Interest Rates and the intra-day re-pricing that occur are determined from the performance of Mortgage-Backed Securities (MBS or Mortgage Bonds), NOT US 10-year Treasury Notes.

Is A Direct Lender Better Than A Mortgage Broker?

No. First, if a couple of Lenders were always the cheapest, everyone would eventually know about them, right?

Over the last several years, we have seen amazing advances in Home Loans. Today's Homebuyer has the widest variety and the most unusual types of Home Loans ever available. Home Loan Brokers have dozens more of these Home Loan programs for Customers than any single Lender. And most of the time, they can provide better deals.

This is because they represent the WHOLESALE rates of these Lenders. These are Rates and Fees not available to the Public. This is the essence of Broker competitiveness. The "Best Deal" is always changing from source to source. A broker has so many sources and receives so much up to date pricing, you are more likely to save money than not.

Next time a big National Lender tells you that the Broker is only a middle man and therefore cannot beat their deal, get it in writing. The bottom line is that there is no one source that is the cheapest. The only other way most Lenders can compete with one another is to somehow convince the Public that they have some "secret way" of providing lower than Market Rates. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. The Market is the Market and you pay for it one way or another. Work with a Home Loan Consultant professional that can explain it all in make sense terms.

More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life... but we do this every single day. It's your home and your future. It's our profession and our passion. We're ready to work for your best interest.