How to get a good interest rate on your next mortgage (without losing your mind)!

I have decided that the phrase “shopping mortgage rates” is an oxymoron. There is no such thing. A mortgage rate is a mortgage rate is a mortgage rate. What you are actually shopping is truth. I will skip the dishonest mortgage broker rant here and cut to the chase.

NOTE: Carve out some time to call all of these brokers on the same day.
Steps:
1. Ask friend near your home or office if they know a decent mortgage broker. Get 3 names.
2. Call brokers.
3. Be pleasant and professional. These are generally nice hardworking people and deserve respect.
4. Tell him/her the amount of the mortgage, downpayment if purchase, estimated value of home and term you want (1, 3, 5, 7, 10, 15, 20, 30, 40 years) . Be prepared to give him/her recent credit scores for the borrower/co-borrower.
5. Once that information has been delivered simply ask “From all of your wholesale sources please tell me the lowest par rate you can lock my loan at today?” Also mention that you want to be fair and let them know you are calling 2 other brokers but you are asking the same question.(At this point they may feel compelled to ask you what rates you have so far and may attempt to sell against the others - cut them off and tell them you are keeping all rates confidential and will do the same with their rate.)
6. Ask broker if there are any discount points priced into the rate.If answer is yes then go back to Step 5 and stress PAR RATE.If answer is no then ask to confirm the wholesaler lender’s name. Write it down and the rate quoted next to the broker’s name.
7. Go back to Step 2 and repeat until you have 3 par rates.
8. When you are done you should have 3 VERY similar rates. Wholesale loan rates reflect a commodity - the time value of money on a certain day. If 2 of the rates are close and 1 is much higher - throw that rate out.
9. Now take the lowest 2 rates and call each back to confirm the rate. Also ask them to email or fax you the rate and the wholesale lender name confirming this is “the lowest par rate you can lock my loan at today”. If they refuse to do this then scratch them from the list.
Step 10. Once you have a winner (lowest rate or person you prefer if rates are same) then call them tell them you would like to buy a mortgage for ___ rate for a term of _____ and there will not be any origination fees or junk fees but you would be willing to pay them a flat fee of $1,500 for their time and expertise. Also promise them you will not further shop the loan and you will not respond to all the phone solicitations you will receive once they run your credit (these phone calls are from unethical loan officers that buy trigger leads from the unethical credit bureaus that sell them - you become a trigger lead when you have your credit pulled by a mortgage broker or bank. (Make sure your loan officer DOES NOT provide your email or phone number when they pull your credit.)
If they agree then you buy the mortgage if not go back to Step 1. They won’t like this method as mortgage brokers love to control the information flow. Some may even tell you this is not legal. Hogwash. Again move on you will eventually find someone honest enough that would rather make $1,500 for performing a service than play games in an attempt to make $4,500.

Good luck and be strong.

Fannie Mae and Freddie Mac Make Bold Moves...

Fannie Mae announced that they will now require a minimum FICO score for loans it buys on an individual basis. The new minimum FICO score will be 580. Up until now, Fannie Mae never set a minimum credit score.

They also announced that they will increase the time required after a foreclosure before a borrower is eligible to obtain a Fannie Mae mortgage from the current 4 year period to 5 years. But, Fannie Mae said that they will allow shorter periods for borrowers who can document extenuating circumstances that have forced the foreclosure.

These changes are just the latest in a long line of changes from Fannie Mae and Freddie Mac in response to the housing downturn and mortgage crisis. These changes come on the heals of two rounds of increasing loan-level pricing adjustments announced by Fannie Mae and Freddie Mac over the past several months.

Getting a Free Credit Report

Your credit scores are more important than ever. The Fair and Accurate Credit Transaction Act of 2003 (FACTA) was passed by Congress to, among other things, allow consumers to monitor their own credit reports from the three main credit repositories – Equifax, Experian, and Trans Union. These free credit reports may be obtained on the internet, over the phone, and through the mail through a centralized source that was established specifically for this purpose (you cannot obtain a free credit report by contacting the credit repositories directly.)On the internet, go to http://www.annualcreditreport.com/ to get copies of all three credit reports. You can also call 877-322-8228 to obtain the credit reports by phone or you can download a form to mail in at http://www.annualcreditreport.com/cra/requestformfinal.pdf I get offers in my e-mail all the time for free credit reports – are these the same thing? No. Many of these offers are from companies that offer other services such as credit monitoring or credit repair. They will give you a “free” copy of your credit report if you subscribe to and pay for their service. The credit report you receive will be from that company and not directly from the main credit repositories. When you get it at http://www.annualccreditreport.com/, you will receive information about how to correct any problems you find directly with the repositories. By law, they have to remove any information that they cannot prove is accurate - and they will let you know the steps you need to take to make the corrections. I haven’t taken out any new credit – why should I check it? First, you want to make sure there are not any mistakes on the credit report. If you have ever had a collection you know that some collection agencies are not very good at updating the information when the collection has been paid off. This will continue to affect your credit score. And, if you wait until you are applying for new credit such as a mortgage, it is too late – your credit scores have already suffered. Second, you want to know what accounts your credit report shows. If there are unfamiliar accounts, you will want to investigate to make sure you are not a victim of identity theft.

Buy, Sell, Invest, Refinance...What do I do?

Phenomenal question. Needless to say that the answer is always different from one person to the other. Selling a home is challenging right now - there is lots of competition in the marketplace throughout the State of Iowa, and even the country as a whole. If someone else has more equity and is willing to take less on an offer, your home now appears to be worth less in the eyes of an appraiser and other potential buyers. It isn't fair...or is it?

Interest rates have seen consistent reductions over the past year. There aren't that many people taking advantage of it for one reason or another. It seems strange that back in the early 2000's everyone was rushing to cash in on the latest craze. Everyone was purchasing a new home or investment property...and especially refinancing. There may be a fear that what happened then is the root cause for why the subprime mortgage bubble failed - well I've got news for you! Yes, some lenders made horrible choices and approved loans for anyone that could count to ten. These lenders are gone for a reason. Secondly, borrowers that could count to ten also made some poor choices - if you have not held a stable job your entire life, it isn't a good idea to buy a $300,000 home, no matter what "deal" your bank can get you! The creative loan programs have vanished...and rates are almost as low as they were when everyone had the refinance rage before. It is safer, smarter in some instances, to check out your options and make a plan that will put you ahead in this game called life.