5 Truths You Won't Hear From Your Mortgage LenderLike most people in this world, your mortgage lender is trying to make money. How they go about getting the money is what distinguishes your mortgage lender from another lender. Some are subversive, extracting money from you by giving you the wrong information or not telling you the whole story. Finding a mortgage lender that tells you the whole truth can be a very difficult process. Therefore, when you are searching for a home loan, it is best to come in as knowledgeable as you possibly can to get the loan you want at the lowest rate. In preparation of meeting with a mortgage lender, here is some information he or she will not tell you and the questions you should ask to combat that:
SEE ALSO: Finding The Right Mortgage Lender
1. I Cant Always Give You The Rate I AdvertisedIf you watch television, go on the Internet, or even go outside at all, youve probably seen ads that promote rates as low as or a supposed happy customer, proclaiming I got my [car, mortgage rate, etc.] for ! While these numbers might excite you, be aware of the fine print. Homes are a huge investment, so getting low rates is a rarity. Mortgage lenders will not often tell you that you cannot get the lowest rate right off the bat. As a result, its important to read the fine print before going into a mortgage lenders office. A question to ask your lender: Do I qualify for the rate you advertised? If not, what is the lowest possible rate I can get?
2. We Might Charge You Extra FeesFees are a commonality in todays society, but often times, they can be over the top. You could easily end up spending more than you and your lender had agreed upon due to extra fees. Under the Real Estate Settlement Procedures Act, mortgage lenders are required to give you a good faith estimate of your closing costs when you apply, but some seedy lenders will try and sneak them in anyway. Before you sign any papers, make sure you trust your mortgage lender. If you dont, you might be duped into paying extra fees. A question to ask your lender: Give me an in-depth, itemized list of my estimated closing costs. This is required by law when you hand in your loan application.
3. You And I Have No Say In Your AppraiserWhen applying for a refinance, your appraiser can make or break the deal. Its in your best interest, then, to have a reliable appraiser so you can save money. Due to reforms in 2009, however, your mortgage lender cannot hire an appraiser to appraise your home. Instead, appraisers are chosen by an independent appraisal management company. In other words, you might get an appraiser with little to no experience or one who is not knowledgeable about their appraisal. While you cant choose your appraiser, you can find out more about them. When an appraiser calls to make an appointment, be sure to ask:
- For their phone number and address, which will tell you if they are in your area (and, therefore, know anything about it).
- If they are a member of your local Multiple Listing Service, which can tell you if they have experience appraising homes in your area.
- For their email address, to establish the homes value and inform them of any remodeling you might have done.
4. Unless You Lock Your Rate, My Quote Means NothingBy now, youve probably heard of how fluid the mortgage market is. A mortgage rate one day could change by the next. Until you lock your rate, your rate will float and change as the market does. Thats why locking your rate is one of the most important parts of obtaining a loan. By committing to your loan through writing, your rate will be secure. But thats only half the story. Even if you lock your rate, the rate of your loan is only secure for 60 days. Your application needs to be processed by the end of that period in order to get your rate completely locked down. So, make sure to turn in your paperwork on time and keep on your lender to do the same. A question to ask your lender: How quickly can I lock down my rate? How quickly do you process my application?
5. Heres How I Make Money One thing on most peoples minds is: how do mortgage lenders make money? If you ask a friend or family member, they are not likely to know, though it is integral to getting a reliable and honest lender. In general, there are three ways a lender can make money:
- From the interest on a loan
- In fees, charges, and points
- By selling your loan to other lenders or investors