Also, during the past week mortgage rates have been steadily rising, but as we inch closer to this month’s employment report it should result in a rate tailspin.

Stay tuned for more…

That said, you can visit our new partner for timely mortgage quote below:

Mortgageratemaster.com

If you have been qualified at a higher rate than you expected or denied because of your credit a FHA (Federal Housing Administration) mortgage may be your little known savior.  FHA loans are guaranteed mortgage loans that are backed by the government.  Since the U.S. government guarantees these loans the mortgage rates are (many times) better than if you took out a conventional loan. 

Here is a checklist you can use to see if FHA is an option suitable for you.  If any of the following statements about you are true a FHA loan may work for you.

• I have a high Loan to Value (loan amount divided by the value of the home exceeds 70%)
• I own a Multi-Family home
• I want to take Cash-out
• I have less than perfect credit
• I had a recent Bankruptcy
• I want to add a friend or family member to the mortgage who does not live with me to help me qualify for the loan
• My current rate has adjusted and I can not handle the new mortgage payments
• I am a First Time Homebuyer
• I don’t have a lot of money to put down on a purchase

(FHA was originally created in 1934 to help the housing industry recover from The Great Depression.  Today FHA programs are being used to help the housing industry out of the credit crisis.)

What does this really mean for you?

It is possibly your best chance to get the lowest rate that 2008 has to offer, but you have to watch out for a couple of things.  The market for mortgage brokers and lenders has been very challenging and practically everyone that is still in the business of refinancing is struggling for business…YOUR business.  This is great news for you because you have a lot of people willing to negotiate with you, but it also brings out the worst in many brokers and lenders. 

Keep one thing in mind…rates do not differ dramatically from company to company.  Fees are not much different either.  So how do you choose? 

Read the following and make your decision.
 
1- Bait and Switch – If one broker really stands out with the lowest rate and nobody else offers you that, it is possible that they are luring you in to commit to him/her.  Once you are committed, they can come up with a reason to increase the rate or fees towards the end of the process.  Another unfortunate practice is they will quote you a rate that is not available while hoping they offer it later on during the process.   Ask for a LOCK CONFIRMATION if the company states that they locked your rate.

2– Credit – If a lender or broker tells you that you should not let others pull your credit report because your score will go down, they are not correct.  You can pull your credit with a hundred mortgage companies and it will count as 1 inquiry, as long as you pull it multiple times WITHIN a 2-week period. You can verify this information here.

3– Fee Disclosures – Remember that ALL fees MUST be disclosed by the mortgage company.  Many companies underestimate their fees in order to gain your business.  They will leave out certain title fees, underwriting fees, prepaid items etc.  They will even tell you NO POINTS and add an ORIGINATION or BROKER fee.  Ask for a GOOD FAITH ESTIMATE from everyone.

4- The Value of your home – Make sure you ask what figure the company is using for the value of your home.  Some companies will overestimate the value because it helps them give you a lower rate lower, but if the actual value comes in less the rate will go up anyway.  After you ask about what value they are using, ask them what would happen if the value comes in less.  When you are comparing companies, make sure everyone is using the same information. 

Here’s a quick checklist to ask companies:

- What value are you using?  What if it comes in lower?
- What’s my loan amount?
- Are there any Points, Broker Fees or Origination Fees?
- Are all third party fees disclosed?  What other fees can I expect?

**BONUS** If you really want to make sure you are working with a reputable company, call the Division of Banks in your state.  Call 411 and ask for “The Division of Banks, Consumer Affairs.”  Once you get someone on the phone, ask them about the company’s track record.  Do not let the surprisingly low fees fool you.  Ask questions and follow our instructions and you will be fine.  Also, remember that rates change very quickly, so be prepared to lock when the time is right.  Read our Lock Tips here

Knowing when to lock in a mortgage interest rate is extremely important during these turbulent times.  Rates can take a nosedive in the morning and end up even higher than before in the afternoon.  This is why it is important, especially now, to know when to lock your mortgage rate. 

Let us assume that you are ready to refinance your home in order to lower your rate, get out of an adjustable rate mortgage, or to take some cash out to fix your roof or to send your kid to college.  Regardless of why you want to refinance, it is important for you to try getting the best possible loan and at the best possible rate.  In order for you to do that, there are a few simple steps for you to take.

5 Simple Steps to a Great Rate

1) Figure out your time frame and stick to it – Let’s say you need to take out $50,000 from the equity of your home to pay for your son’s first 2 years of college and you want to have the money in your hand within 30 days.  Your program and interest rate has to be finalized about 10 to 15 days prior to you receiving the money.  During the first 15 days, follow the market and stay in touch with your mortgage consultant for updates.

2) Decide on a Mortgage Company – After speaking with two or three lenders you will realize who really wants to help you and who is just patronizing you by promising the world for free.  The fact is, practically every company offers the same exact rates with very similar costs.  Pick a company that is at least located in your state or the surrounding proximity and has been in business for a long time.  Also, the mortgage consultant should be asking you a lot of questions in order to properly place you into the best program.  Remember to also ask if the company offers a “float down” option if rates improve after you already locked in.  Mortgage Brokers usually offer this option for two to three weeks after your original lock!  This means you can get a lower rate even if you originally locked into a higher rate.  There are usually limits to this, but most places will lower your rate as long as is it decrease by more than .25%. 

3) Get your paperwork ready – Fax whatever income paperwork the mortgage consultant requests as soon as possible.  Most companies will not lock an interest rate for you if your information is not verified.  If rates dramatically drop one day and you have not sent the required documents, you can lose the chance to take advantage of the lower rate and the time.

4) Read our Rate Lock suggestions – We update our information two to three times per day in order to help people know what to expect with short term and long term mortgage rates.  We also let you know when those big “Mortgage Rate Dips” occur. 

5) Stay in close touch with the Mortgage Company – Call your mortgage consultant every two days and ask about what is going on with your loan (although he/she should be giving you updates every day) and what is going on in the market.  Use the information you obtain from our website to your advantage.  Check out our daily mortgage rates update here.

The key is for you to stay up-to-date in this quickly changing industry so that you can achieve the best possible program.  WARNING!!! Sometimes after you close your loan, interest rates slightly improve just to spite you.  Relax and know that you maximized your opportunity during the time frame you set and move on. 

After the loan is complete, keep in touch with your loan consultant every 3-6 months and ask him/her where the rates are.  If you do what we recommended, chances are that you will not need to refinance again.  

Good Luck!

Chances are, most of you have done this same thing. This is especially the case in today’s tough economy where pocketbooks are zipped tight and wallets lie very, very flat (I can’t even feel mine when I sit down anymore!). Nonetheless, it is clear that the intent of this late night inquiry was to save money, which is what drew you to Google to begin with after all. Whether you Googled “lower my bills” or “really great rate” what follows is similar, but how you handle what you now got yourself into is critical to getting the most out of the experience.

Let me dig in a bit…

By completing the on-line application, you essentially “opened up the floodgates” so to speak. Depending on the site you landed on, you were asked a multitude of questions that were then packaged and can be sold up to 6 times to different mortgage brokers and lenders. In turn, they then started to compete for your business, but how can they compete if they never speak to you?? Therein lies the problem and most of you are not ready for this next step (or steps, for there are many more than most are ready to handle)…

So here’s what will happen…

You will be called and emailed dozens of times by EACH of these brokers or lenders. They will all be leaving “catchy” messages and sending well-structured e-mails enticing you to call back. After all, the site you landed on isn’t a financial institution, but rather an information packaging business that sells your information to these institutions. Thus, by thinking you effectively and efficiently applied for a loan, you are gravely mistaken. Instead, you merely expressed an intent that was sold to a pack of hungry loan officers for a handsome sum.

So…what do you do??

Breathe, relax and trust your instincts. The INTERNET is rapidly becoming THE means for many to not only handle their grocery shopping through Peapod, book shopping through Amazon, and media shopping through Buy, but also to handle their home finances. While you may end up speaking to many brokers or lenders, it is usually in your best interest to rely on the proximity of that lender to your home and good old-fashioned “gut” instinct to make your decision on which one to work with. Is the lender local? Do they have a website? How long have they been in business? Do they often help their customers via the Internet channel? Do they know your market? How does the loan officer sound? Is he knowledgeable? Professional? Did you have a positive conversation? Is he persistent?

Of course there is much more to consider, but this is always your best start to getting to the most honest source. Proper patience and common sense are the steps that will instantly help you “narrow down the playing field.” Options are good, but too many options coupled with endless phone calls and emails can be dizzying to say the least. If your true reason for applying on line was to entice competition, then let it begin and entertain a few offers. However, “garbage-in equals garbage-out”, so don’t string your broker or lender along by not fully disclosing and evaluating everything or by comparing apples to oranges because the broker’s process is very different from the lenders’ which is why directly comparing them to one another doesn’t truly work (see this week’s “Bucket!”).

Finally and most importantly..

Be sure you are really serious and up for the challenge if you “apply” on-line. If your true intent was to get a lower mortgage rate and improve your financial situation, then know what you’re getting yourself into and commit to the process so you can get the most out of it. Otherwise, everyone’s time will be wasted, most important of which will be yours.