Best Mortgage Rates, Timing, and Reality

I do not do home loans.  I could, but I don’t.  I do know how to find the right house for my clients, negotiate the offer, and close the deal.   That is my specialty.  I leave the loan process to professionals that live and breathe loans everyday.  Professionals like Gabe Bodner with RPM Mortgage in Cambell.  Gabe and I have worked together on some easy purchases and some not so easy purchases.  As a team, we have never lost a deal.  One of the most common challenges comes into play when a client has a pre-approval but decides on the day they write the offer to “shop” the interest rate on their loan.

Don’t get me wrong, anyone in the industry supports the right and the reason for a borrower trying to get the lowest rate.  We understand that 30 years of interest is an amazing number.  However, trying to get the lowest interest rate when rates change daily (almost every few hours) is a very elusive goal and can end up costing the buyer more money and stress in the long run.

Loan rate shopping is more challenging today than it was even a year ago.  With the new RESPA (Real Estate Settlement Procedures Act) of 2010, comes some very specific rules on how fees are disclosed to the borrower.  This is a good thing, but the with consumer safeguards the typical 30-day close of escrow can be very, very tight.  Many times there is a cost to being late.  Loan locks may need to be extended or sellers may charge a per diem late fee if the contract is not closed on time.  These changes  are not necessarily the easiest to work with and many buyers don’t completely understand why it matters.

In a competitive market, (high demand, low supply) it is not uncommon to be presenting offers in competition with other buyers.  To make my clients’ offer rise to the top we set a strategy on price, terms (time lines), and conditions (repairs).  Many times, being able to complete the deal in the shortest time-line is the strongest negotiated point.  Commonly, I have been able to negotiate a deal for my clients amongst many offers, even when some of those offers were higher priced, simply because I conveyed a commitment by my client, myself, and the loan officer,  to stay on time, and close the deal.

We thought it might be helpful to home buyers for Gabe to explain the new RESPA 2010,  how that impacts the typical time line for loan approval, and how shopping rates once in contract can cause significant time delays in receiving loan approval and funding. We decided to create a short video to walk buyers through the steps of loan approval to help offer an overview of how the new RESPA rules can effect the purchase time line.  Bottom line, if you are going to shop, shop before your offer is accepted.

So how do you select the best mortgage professional and most likely the best interest rate?

  1. Select someone who takes the time to review your specific goals and will work to provide you with the most sound advice.
  2. Look for someone who will provide you with several options to compare and to choose from given your specific goals and time horizons.
  3. Ask about their system for consistent follow up and good communication throughout the process with you and your real estate agent.
  4. Experience is important, particularly in this current market.  Look for a professional who has dealt with your specific type of situation whether it is a purchase , a refinance, debt consolidation, a divorce, etc.
  5. A full-time professional is a must.  Avoid ” friends of friends ” originating loans as a part time job from their garage.
  6. Ask to talk to clients the mortgage professional has worked with recently.

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