The most frequently asked question when looking for a new mortgage tends to be “What are your mortgage loan rates?”. The problem with this approach is that each mortgage rate quote (if accurately done) is a little different. You should be aware that rates advertised are often the 'sweet heart deal' and you should formally 'apply' so a mortgage professional enough information to properly prepare a custom rate quote.
Getting a Custom Mortgage Rate Quote
Now that you know there is more to a mortgage rate than what meets the eye, let's talk about the questions that must be answered to get an accurate mortgage rate quote. Believe it or not, there are 30 pieces to this mortgage rate puzzle.
1. Where is the property located? (City, State, Etc.)
2. Is this a purchase or refinance?
3. What type of property is it? (Single family home, condo, town home, high rise, duplex, triplex, etc)
4. What is the condition of the property?
5. How will this property be occupied? (Owner occupied, second home or investment property)
6. How long of a note would you like? (for balloons… 7 year, 10 year, etc)
7. How much is the property worth? (Sales price AND appraised value)
8. How much money will you be putting down? (…is it your own? Is it gift funds? Is it seller down-payment assistance?
9. What would you like the loan amount to be?
10. How long of an amortization would you like on the loan? (10 years, 15 years, 20 years, 30 years, 40 years, 45 years?)
11. How much land is the property being sold with? (if it’s a huge acreage, it won’t be a conventional loan)
12. IF it’s a condo - is this condo project approved? (I don’t expect clients to know, but we have to find out!)
13. What are taxes on this property?
14. What is insurance on this property?
15. Is this property located in a flood zone?
16. How many properties do you already own? How many of those are financed? By whom?
17. What terms would you like to have? (fixed or adjustable?)
18. IF you’re considering adjustable, what length would you like to have it fixed? (6 months - 10 years)
19. IF you’re considering adjustable, which index would you like to have your ARM tied to?
20. What type of loan are you looking for? (fully amortizing, interest only or negative amortization)
21. How quickly are you looking to close on this loan? (lock period and picking the right lender..especially in today’s market)
22. Do you have a preference on which bank services your loan? (some clients like some banks and hate others
23. What is your credit score? (We need a full credit report. I won’t issue a pre-approval unless it’s in Four Legacies Mortgage’s name. We can’t close a loan for you with someone else’s credit report.)
24. What’s your debt to income ratio? (We will calculate this for you when we have your income and expenses fully documented).
25. Do you plan to escrow for taxes and insurance?
26. Can you document your income? (and make the numbers work doing so!)
27. Can you document your assets? (some programs require certain reserves, etc.)
28. Will you be getting private mortgage insurance (PMI)?
29. IF you’ll need PMI - which type will you get?
30. Will you be (or do you already have) getting a second mortgage or Home Equity Line of Credit (HELOC) with this new first mortgage
Do any of these surprise you? You may end up surprised if one of these questions aren't addressed prior to your mortgage rate quote. Especially your credit score, it could impact mortgage rates as much as 2 full percentage points.
Therefore, ask yourself. Have you been quoted a rate without answering any of those questions? It may not be accurate!
Mortgage Rates Change Multiple Times Throughout The Day
Here is the real problem. If you are really trying to call around to each bank or mortgage company (or even a couple), time is not on your side. To get accurate, competing mortgage rate quotes; you would have to catch each one of them at the same time, with the same information and hope they actually know what they are doing when they quote you a rate. IF you find a ‘better rate’ with a certain lender, that rate’s only good until the next rate sheet. For reference, mortgage rates changed every four hours last month.
Bottom Line
Just remember, make sure that you're getting the full picture when getting a rate quote. If you hear a figure before you answer any questions, don't assume it's accurate. Ask questions, get answers. As an informed consumer, you will be miles ahead of the rest.
Tyler Osby
tyler@tylerosbyteam.com
Ph: (866) 497-2136
www.wealthwithmortgage.com
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