Rate Shopping?

Here's the inside scoop on how to do it right...

Buyers looking to finance homes are easy prey for non-discriminating lenders who look to confuse buyers in order to make a profit.  In Colorado Lenders are not licensed, nor do they have educational standards. Good advice to follow when looking for someone to finance your home is to learn as much as you can about the process and what you are doing.  A professional lender who has a long-term track record of providing solid advice and who explains the process in a manner you can understand is your best choice.

Finding a home loan is easy, finding the BEST home loan may take some footwork on your part.  How do you decide?  The following questions are typical questions  you should ask your prospective lender.  The answers should help you decide if your choice is a good one.

Financing is more than just getting a good rate.   

1. What are mortgage interest rates based on? ~ The correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note.  While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, they can move in completely opposite directions.  DO NOT work with a lender who has their eyes on the wrong indicators.
2. What is the next Economic Report or event that could cause interest rate movement? ~ A professional lender will have this at their fingertips.  For an up-to-date calender of weekly economic reports and events that may cause rates to fluctuate, visit this site.
3. When Bernanke and the Fed "change rates," what does this mean and what impact does this have on mortgage interest rates? The answer may surprise you.  When the Fed  makes a move, they can change a rate called the "Fed Funds Rate" or "Discount Rate." These are both very short-term rates that impact credit cards, Home Equity credit lines, auto loans, ARMS and the like.  On the day of the Fed move, long-term Mortgage rates most often will actually move in the opposite direction as the Fed change.  This is due to the dynamics within the financial markets in response to inflation.
4. Do you have access to live, real time, mortgage bond quotes? If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change, you are talking with someone w ho is still reading yesterday's newspaper, and probably not a professional with whom to entrust your home mortgage financing.  Would you work with a stockbroker who is only able to grab yesterday's paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market condition could cause changes in the near future?