Are you mortgage rate shopping in Gary?
STOP SHOPPING AND READ THIS FIRST!
I can’t tell you the number of calls I receive each day from curious Gary, rate shoppers wondering what their rate will be today. Earlier in my career, I would respond by asking “what would you like your rate to be?” The borrower would tell me, and I would ask him the type and the term he would like his loan to be and an estimate of what he was willing to pay in closing costs. Once these questions were answered, I would tell him that he must be the unluckiest guy on earth. Why? My response, “I had a borrower yesterday that asked for those exact same terms but they had already been taken by a previous borrower.”
Guys and Gals, I cannot quote an exact rate and no one else in Indiana can either; unless they guess and just get plain lucky. In today’s mortgage environment there are too many factors that must be considered when determining rates.
- Credit Scores
- Loan to Value (LTV)
- Size of Loan
- Cash Out Refinance/No Cash Out Refinance
- Type of Loan
If anyone quotes you a rate without taking a full application and asking some detailed questions, you’re dealing with a fool, a liar, or a cheat. It just cannot be done! Yes, many people in Indiana do qualify for rates below 5% but they meet very strict criteria and in order to find out if they qualify, they have to answer a series of questions. In other words, before you ask for the rate, give the loan officer the opportunity to take a full mortgage loan application and pull your credit. This will give him some idea of what he can do for you. He will also be able to give you, or should give you, as it is required by law, a “Good Faith Estimate” (GFE) and a Truth In Lending Statement (TIL).
These are two very important documents that will detail your rate and costs. You have to decide if the charges are fair and accurate. HOW? Simple; let another mortgage company compete for your business by providing you with their GFE and TIL, based upon the same information you initially provided. Place the documents next to one another and see where the differences are and then ask questions and/or negotiate until you are satisfied. It’s almost like buying a car but you have control if you have these two documents.
Another frustrating phone call I often receive is the borrower that tells me they’re in a hurry and need to close by the end of the month - can I accomplish their goal. Of course I can, “When Pigs can Fly”. I want to close loans yesterday and I do my part, but the challenge is usually with the borrower and/or the lender. Most borrowers will wait a few days after receiving the GFE and TIL to make their decision. Once they agree to proceed with the loan, we order the appraisal which takes a few more days. Meanwhile, I am asking the borrowers for documents such as W-2’s, tax returns, verification of employment, and bank deposits/statements, title reports, and whatever else the lender might request. These all take time and once they are together and submitted to the lender, the lender may ask for some additional documents. The lender will ask the IRS to verify that the tax returns submitted are accurate. They may also want to verify any items of interest on the credit report. In other words, if everything goes well, a loan should close in approximately 30 days. If there are any major issues, it could take up to 60 days.
Whatever the case, a good loan officer should be able to tell you within a few days after taking your application if you will be approved and the terms of your loan. I tell people that I am highly confident that their loan will close under the terms and conditions I have outlined and agreed to in writing. However, in these changing times there are no guarantees.
Make it easy on yourself. Before you meet with or call your Gary, loan officer, gather all of the information listed below. When you make the call, you will have the information available and you can fax or email the information to them. This will make the process less stressful and everything go so much quicker.
Items you need:
- Closing statement from your last refinance
- Copy of mortgage statement (1st and 2nd Mortgage, if applicable)
- Last two pay-stubs (yours & your spouses, if applicable)
- W-2’s 2008, 2007 (yours & your spouses, if applicable)
- Last two months bank statements
- Divorce Decree - if you are paying or receiving alimony and/or child support
- Last appraisal of your property
- If you’re on Social Security, a copy of your Determination
- Copy of the front page of Homeowners Policy (dec page)
My most frustrating phone calls are where I tell someone they do not qualify for a particular rate or type of loan, and they immediately say thanks or hang up and don’t allow me to finish. As I said, it’s my job to give the bad news as well as the good news. When I deliver the bad news I also tell you exactly how to overcome the challenges standing in your way. It might be as simple as going out and getting a secured credit card for a few months and showing you can handle making monthly payments on time. Or, as simple as removing some credit blemishes on your credit report or paying down some credit card balances. In other words, it may take some time but rates will “probably remain low” for the next 11 months or so. You have some time to correct the challenges.
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