I would be remiss in writing an article about how to choose the perfect mortgage broker without first discussing rates.
The first question most people ask when shopping for a mortgage is what are your rates.
Rates are very personal.
A great deal of information is needed in order to quote factual rates.
Loan-to-value, debt-to-income, credit scores are just a few of the many factors that will affect the rate available to you.
Furthermore, looking at advertised rates in the paper, internet and rates advertised on the radio are designed for one thing and that is to get you to call.
So what are you supposed to look for when choosing a mortgage broker? 1) Be Suspicious When a person calls our office or goes to our website I know that first and foremost they are interested in what our rates are.
But as previously mentioned rates are a very personal matter.
There are a wide variety of types of loans all with different rates and one size does not fit all.
Asking what your rates are is a loaded question.
Do you want the rate that is available to you, or do you want a rate that you want to hear? Obviously, you want the rate that is available to you.
However, if the mortgage broker immediately starts to quote rates be suspicious.
He is just trying to move you further along into the sales process.
2)Be Prepared A great mortgage broker is going to take the time to find out exactly what your needs are by asking questions.
So be prepared in advance.
A) Knowing your credit scores is a must.
There are numerous websites available to you to run your credit and do yourself a favor.
Pay the extra fee to get a tri-merged credit report with your credit score.
Doing this prior to shopping for a loan has a few advantages: incorrect items can dealt with prior to a broker pulling credit and multiple credit reports will not need to be pulled by various brokers keeping you in control of the process.
B) Know your gross monthly income.
If you are married, know your combined gross monthly income.
That is your pre-taxable monthly income.
C) Have an idea what your front and back end ratios are.
Your front end ratio indicates the percentage of income that goes toward housing costs, which for renters is the rent amount and for homeowners it is your principal, interest, taxes and insurance amount.
Also included in that number could be your mortgage insurance premium when applicable and homeowners association dues.
Your back end ratio indicates the percentage of income that goes towards paying all recurring debt payments including those in the front end ratio as well as other debts such as credit card debts, car loans, student loans etc.
You can find these debts itemized on the credit report.
A good rule of thumb is that your front end ratio should not exceed 28% of your gross monthly income and your back end ration should not exceed 36% of your gross monthly income.
3)Be Honest Honesty is a two way street.
Do not over inflate your income or credit score because sooner or later it is going to catch up with you and the information you provide has a direct effect on the rates available to you.
Conversely, demand that your broker be honest with you.
It is only through open and honest discussions that you will get the best mortgage solution that fits your needs.
Quoting ridiculously low rates in order to get you further along in the sales process is a sure sign of trouble down the road.
4) Do Not Be Fooled Do not fall victim to the bait-and-switch advertising tactics you are bombarded with everyday.
I realize that it is all around you.
On my way to work I hear the same mortgage advertisement each day and I wonder if this guy has a conscious.
Obviously, it must be effective but his tactics are questionable and I would rather take the high road.
Having an insiders knowledge and the fact that taking advantage of the situation is not a way to run a business nor build a long list of satisfied clients who come back time and time again and refer friends and family and that is what I consider successful.
I hope these few tips will help your next home loan be the perfect mortgage solution for you.
It is my philosophy not only to get you the best rate at the lowest cost in the marketplace but to help you understand the process along the way.
Only then will you be able to protect yourself from the sharks in the water.