How to Shop Mortgage Lenders

Here are some questions you should ask lenders before deciding who you are going to work with on your mortgage. The largest financial transaction of your life is far to important to place in the hands of someone who is not capable of advising you properly and troubleshooting issues that may arise along the way.

What are mortgage rates based on? The correct answer is mortgage-backed securities (MBS) or mortgage bonds, NOT the 10-year Treasury note or the Fed.

What is the next economic report or event that could cause interest rate movement? A professional lender will readily know this information. I post a weekly mortgage update for my clients and real estate partners.

When the Fed “changes rates” what does this mean? When the Fed changes rates, it does NOT directly impact mortgage rates. The Fed Funds Rate impacts rates that are based on the Prime Rate, like credit cards, auto loans and home equity lines of credit. Mortgage rates will often react to the Fed’s rate decisions as they are based on bonds (MBS). Often times, mortgage rates may move in the opposite direction than the Fed Funds rate.

What if mortgage rates improve after your rate is locked? Lenders should be able to renegotiate your rate lock commitment after your rate is locked should markets improve dramatically (certain conditions will need to be met).

How will you help me get my offers accepted? I work closely with your buyers agent throughout the process. The first step is to make sure you are fully pre-approved and NOT just prequalified. Before submitting an offer, I create a digital preapproval presentation that is presented to the seller’s agent. Sellers and their agents prefer to work with local lenders who have local underwriting vs internet lenders or big banks with out-of-state processing centers. We also offer a cash-buyer program to assist should you find the market to be highly competitive.

How often will I hear from you after our contract has been accepted? You will hear from me (personally) at least once a week and I’m available should you ever have questions. I do have a team that supports me, however I do not hand my clients off once the offer is accepted. If we have not been in touch during the week, you can expect me to reach out to you on Friday, even if it’s just to say “everything is proceeding for closing on time – have a great weekend!”

Will my mortgage be sold after closing? New American Funding retains just over 95% of the mortgages we originate and continues to service them after closing. Odds are, you will continue to be cared for by our award-winning servicing department and not have your mortgage sold over and over again.

How long have you been originating mortgages? This is possibly the largest financial transaction on the most valuable and important items people own in their lifetimes – it is critical to make sure someone is experienced enough to see you through from start to finish. I joined New American Funding in November 2022 after 22 years at Mortgage Master Service Corporation; prior to my mortgage career, I managed an escrow office. You can check out a loan officer’s resume online at NMLS Consumer Access.

Here are a few tips for comparing rates:

• If you’re shopping other mortgage lenders, make sure you try to get the quotes at the same time on the same day. Mortgage rates change constantly – sometimes several times a day. Shopping one lender on Monday morning, another on the afternoon and one on Tuesday, is not comparing rates “apples to apples”. Mortgage rates are based on mortgage backed securities (bonds) and pricing moves similar to the stock market.
• Do not factor the prepaids or reserves when shopping rates. Do check to see if the mortgage originator is properly disclosing them. However, they are not an actual “closing cost”. The mortgage originator does not have control over how much your property taxes or home owners insurance is. If you’re doing a refinance and have an existing reserve account, it is typically refunded to you by the mortgage servicer a few weeks after closing.
• Compare the net closing cost with the interest rate. Your net closing cost will be discount points plus closing cost OR it will be closing cost minus the rebate credit.
• Compare by the same lock period or a lock period that is appropriate for your scenario. For example, if you’re comparing a refinance where you’re paying off your second mortgage and one where you’re going to subordinate the second mortgage – subordinations tend to require a much longer time period.
• Make sure that you provide enough information for the mortgage originator to provide an accurate quote.

More than likely, this is the largest and most important financial transactions you will ever make. My goal is to help you make informed decisions throughout the home financing process.

Please contact me if you have any questions.