Consider Mortgage Options Carefully

Most Charlotte home buyers will need mortgage financing to buy a home. When considering a mortgage lender be careful that you don’t fall in to the “big name” syndrome. In other words, don’t make a decision on your mortgage based on the name of the bank or lender. Just because a bank has branches or ATM’s on every corner does not mean they have the best mortgage option for you.

After all, McDonald’s sells the most hamburgers in the world…. but that doesn’t mean they make the best hamburgers, now does it?

When you are searching for a lender, I recommend that you make a decision based on how you are treated and cared for, not on the rate quoted. I am not saying you don’t need to care about the rate. But honestly, gone are the days of any lender being able to sell a rate that is not competitive.

With the internet, the vast array of lenders and products and the general media itself, the average consumer is much more informed than ever before. Its sad to say, but many consumers know more about the mortgage business than some new loan officers or even real estate agents know.

What you want to seek is someone that will take the time to discover your needs, desires, goals, fears… all the things that make you… well, you! The instant rate quoter doesn’t care about what is best for you. That type of lender is looking out for one thing… their pocket. They believe that by throwing out some rate that stops you in your tracks, they can slam you into a loan regardless of its fit for your life!

Here is an example…

Joe wanted to buy a home and planed to keep the home for at least 10 years. Over those 10 years or so he expected to start a family and grow his business. In about 10 years though, the contract for his business allows him to sell the franchise and with the expected growth he can really make a move in life. But until then, money and his budget would be tight.

Joe called Tommy at Instant Quote Lenderand Tommy right away starts talking about this great loan with a super low rate of 5.00%. Joe thinks that rate is amazing, but called one more lender before making a decision.

Next he called Ed Nailor at Residential Mortgage Center and together they began to discuss his goals. After listening to Joe’s plans and goals, Ed advised Joe that a longer term mortgage at 6.00% with an interest only payment option may be the best mortgage solution for Joe’s needs. This gave him the lowest payment possible, with the option of making principal payments as Joe’s budget allows.

This made perfect sense… but what did Tommy offer Joe?

Without taking the time to get to know Joe, Tommy automatically assumed that the best rate he could quote would be what was important to Joe. So he quoted the rate of a 10 year mortgage loan. Although the rate was a full point lower, the payment would have strapped Joe and wrecked his budget.

Another example:

Sally wanted to buy a home for her and her daughter Tina. Sally started by calling one of those big national banks. The bank was offering this “no fee, no mortgage insurance” program. As a matter of fact, the bank was spending millions of dollars to advertise the program! (RED FLAG FOLKS!) Loan officer Stanley informed Sally of how great the loan was and how no one else could offer a better loan for her!

Sally also called Ed Nailor at Residential Mortgage Center. After getting to know Sally, Ed discovered that Sally was buying a home for the long haul, but the home was in a great area that was getting great appreciation, even in a down market! Sally planned on paying a bit more towards the monthly payment each month to pay it off early, but wanted a longer term mortgage so her budget had flexibility. The program Ed offered had some closing cost and even required PMI. Which did Sally choose?

She went with Ed! The reason? Even though the big bank offered a “no fee, no PMI” mortgage loan, the rate was higher that the mortgage loan Ed offered.

You see, a no closing cost mortgage does not mean there are no charges. Attorneys don’t work for free, neither do appraisers. However, if you raise the interest rate on a loan, the long term yield is better and a lender can use that yield to pay for the closing costs. And I have never ever seen free insurance! So again, the mortgage insurance needs to be paid in a higher rate. Ok, so the rate was higher… so what?

Well, with PMI, if you reach a point in which your loan balance is less than 80% of the value of your home, you can request the PMI be cancelled. For Sally, the appreciation and accelerated payments she planned to make could have allowed the elimination of PMI in as little as 4 years! Afterwards, she would still have a much lower rate and save thousands of dollars in mortgage interest! The additional monthly savings could also be applied to her mortgage payments allowing the mortgage to be paid off 10 years early!

This is the difference you will find when you work with a lender that takes the time to listen. Again, McDonald’s may sell the most hamburgers, but that doesn’t mean they are the best. After all, this is about more than just a mortgage… its you home!