Remember when you last shopped for a new washing machine or home appliance? Was the salesperson truly knowledgeable about his products and matching the right machine to your needs? Or did you feel he was trying to “sell” you before you could walk out the door?
The heydays of Big Banks, boiler rooms, and smooth-talking mortgage salespeople are long gone. Yet consumers often still “shop” from lender to lender, as if they were visiting appliance warehouse stores, wasting their valuable time, hoping to save a few bucks on their closing costs or payments.
The largest financial transaction of your life is far too important to place in the hands of a mere mortgage salesperson. But how can you tell whether you’re talking to a mere “salesperson” or a highly qualified and experienced professional?
Here are a few questions you should ask:
- What are mortgage interest rates based on?
The only correct answer is Mortgage Backed Securities (MBS) or Mortgage Bonds. Mortgage rates are NOT driven by The Federal Reserve or the 10-year Treasury Note. While the 10-year Treasury Note often trends in the same direction as Mortgage Bonds, it’s not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.
- What is the next Economic Report or event that might cause interest rate movement?
A true mortgage professional will have this at their fingertips. To receive a calendar of upcoming economic reports and events that may cause rates to fluctuate, please contact my office.
- When Fed Chairman Ben Bernanke and The Federal Reserve “change rates,” what does this mean? What impact does this have on mortgage rates?
The answer may surprise you. There’s a common misconception that “The Fed” controls mortgage rates. This is absolutely NOT true!
The Federal Reserve influences mortgage rates by buying MBS. They also manipulate two key interest rates called the “Fed Funds Rate” and the “Prime Rate.” These are short-term rates that impact credit cards, credit lines, auto loans and the like. Since MBS are market driven, it is not unusual to see mortgage rates move in the opposite direction of Fed changes! If you desire more details on how world markets and events affect mortgage rates, I’d be happy to schedule some time with you.
- What’s happening in the market today? What do you see happening in the near future?
If a salesperson cannot explain what’s driving interest rates today, as well as how tomorrow’s news may affect rates, you’re probably talking to the wrong person. Don’t entrust your home mortgage financing to an uninformed and unqualified mortgage salesperson.
- How can I use my mortgage as a financial instrument to help me accomplish my financial goals?
With glazed-over eyes, most mortgage salespeople will answer with, “Umm…Huh??”
If the answer you get is similar, run away and come straight to my office.
Be Smart…Ask Questions…Get CORRECT Answers!
Buying and financing your home is one of the largest and most important financial transactions you’ll ever make. While you may do this only a few times in your lifetime, we do this every single day.
It’s your home and your future. It’s our profession and our passion.
Don’t entrust your mortgage to anyone but the most competent, qualified, and Certified Mortgage Planning Specialist®. By consulting with me well before you find your new home, we can ensure the mortgage matches your needs, complements your financial plans, and helps you attain your financial goals.
And guess what? The rates and fees you’ll receive are probably about the same as if you went to “Your Bank.”
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.