Are you shopping around for the best Mortgage Broker in San Diego to help with your home loan? Here’s the “Inside Scoop” on how to do it right!
First, make sure you are working with an experienced, professional San Diego Mortgage Broker or banker. A home loan is the largest financial transaction of your life and is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way.
How can you tell who is the best San Diego Mortgage Broker?
Here are 4 simple questions your San Diego Mortgage Broker must be able to answer correctly. If they don’t know the answers, then they are not a true mortgage professional and you should seek someone who does know the answers.
1) What are San Diego mortgage interest rates based on?
The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. The 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, but it is not unusual to see them move in completely opposite directions. Make sure you are working with a lender who has their eyes on the right indicators.
2) What are the next Economic Reports or events that could cause movement in interest rate in San Diego?
A professional mortgage broker or banker will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause mortgage rates to fluctuate, you can follow my weekly San Diego Mortgage Rate Update post or subscribe to my weekly e-newsletter by clicking on the newsletter link to the right of the page.
3) When Ben Bernanke and the Fed “adjust rates”, what does this mean and what impact does this have on San Diego mortgage interest rates?
When the Fed makes a move, they are changing a rate called the “Fed Funds Rate”. This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates do not necessarily adjust lower as well because mortgage rates are based on mortgage bonds. In a “normal” market, rates often will move in the opposite direction as the Fed change, due to the dynamics within the financial markets. This has not been the case recently, due to the Fed’s huge impact on the markets with low rates and their QE3 program.
4) What is happening in the market today and what do you see in the near future?
If a San Diego Mortgage Broker cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are talking with someone who is still reading last week’s newspaper, and probably not a professional with whom to entrust your home loan financing.
Once you are satisfied with the answers that you receive from the above questions and believe that you are working with a professional mortgage broker in San Diego, here are the rules and secrets you must know to “shop” effectively.
IF IT SEEMS TOO GOOD TO BE TRUE, IT PROBABLY IS.
You don’t really need me to tell you that, do you? Mortgage money and interest rates all come from the same place and if something sounds really unbelievable, you better ask a few more questions and find the hook. Is there a prepayment penalty? If the rate seems incredible, are there extra fees? What is the length of the lock in? If the fees are discounted, are they built into a higher interest rate? In most cases, rates are within .25% of each other. If the difference is great than that, make sure to ask additional questions.
YOU GET WHAT YOU PAY FOR.
If you are looking for the cheapest deal out there, understand that you are placing a very important and complicated process into the hands of the lowest bidder. Best case; expect very little advice, experience and personal service. Worst case; expect that you may not close at all. All too often, you don’t know until it’s too late that the cheapest option isn’t the BEST. Remember that if you’ve heard horror stories from family members, friends or coworkers about missed closing dates, or big surprise changes at the last minute on interest rate or costs…these are often due to working with discount lenders who may have a serious lack of experience. Most importantly, remember that the cheapest rate on the wrong strategy can cost you thousands more in the long run. We may not always be the cheapest option, but our rates and costs are very competitive compared to most other lenders and we have invested in the systems and team we need to ensure the top quality experience that you deserve.
MAKE CORRECT COMPARISONS.
When looking at estimates, don’t simply look at the bottom line. You must compare lender fees to lender fees, as these are the only ones that the lender controls. And make sure lender fees are not “hidden” down amongst the title or state fees. A Mortgage Broker is responsible for quoting other fees involved with a San Diego home loan, but since they are third party fees – they are often under-quoted up front by a Mortgage Broker to make their bottom line appear lower. They know that many consumers are not educated enough to NOT simply look at the bottom line! APR? Easily manipulated as well, and worthless as a tool of comparison.
UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND.
This means that you can have any interest rate on your San Diego Home Loan that you want – but you may pay more in costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all –but understand that this comes at the expense of a higher interest rate. Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are. A professional San Diego Mortgage Broker will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.
UNDERSTAND THAT INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY.
This means that if you are comparing San Diego Mortgage Rates and fees – this is a moving target on an hourly basis. For example, if you have two San Diego Mortgage Brokers that you just can’t decide between and want a quote from each – you must get this quote at the exact same time, on the exact same day, with the exact same terms, or it will not be an accurate comparison. You also must know the length of the lock you are being quoted, since longer rate locks typically have slightly higher rates.
Our advice is to be smart, ask questions, and get answers. As you can imagine, we wouldn’t be telling you how to shop around if we weren’t pretty confident that we can give you a great value and serve you the very best.
More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life… but we do this every single day. It’s our profession and our passion. We’re ready to work for your best interest!
If you would like a quote of your own, please click HERE. Or you can call 858-519-3935 and ask me about you specific scenario. I am always happy to answer any questions you have.