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SHOPPING AROUND FOR A
MORTGAGE?
HERE'S THE INSIDE SCOOP
ON HOW TO DO IT RIGHT!
First: make sure you
are working with an experienced, professional lender. The
largest financial transaction of your life is far too important
to place into the hands of someone who is not capable of
advising you properly and troubleshooting the issues that may
arise along the way. But how can you tell?
Here are FOUR SIMPLE
QUESTIONS YOUR LENDER ABSOLUTELY MUST BE ABLE TO ANSWER
CORRECTLY. IF THEY DO NOT KNOW THE ANSWERS... RUN... DON'T
WALK... RUN... TO A LENDER THAT DOES!
1) What are
mortgage interest rates based on?
(The only correct answer is Mortgage
Backed Securities or Mortgage Bonds, NOT the Fed or the 10-year
Treasury Note. While the 10-year Treasury Note sometimes trends
in the same direction as Mortgage Bonds, it is not unusual to
see them move in completely opposite directions. DO NOT work
with a lender who has their eyes on the wrong indicators.)
2) What is the
next Economic Report or event that could cause interest rate
movement?
(A professional lender will have this
at their fingertips. To receive an up-to-date weekly calendar of
weekly economic reports and events that may cause rates to
fluctuate.)
3) When the
Fed "change rates", what does this mean... and what impact does
this have on mortgage interest rates?
(The answer may surprise you. When the
Fed makes a move, they are changing a rate called the "Fed Funds
Rate". This is a very short-term rate that impacts credit cards,
credit lines, auto loans and the like. Mortgage rates most often
will actually move in the opposite direction as the Fed change,
due to the dynamics within the financial markets. )
4) What is
happening in the market today and what do you see in the near
future?
(If a lender cannot explain how
Mortgage Bonds and interest rates are moving at the present
time, as well as what is coming up in the near future, you are
talking with someone who is still reading last week's newspaper,
and probably not a professional with whom to entrust your home
mortgage financing.)
Be smart... Ask
questions... Get answers!
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