Lowest Rate + Lowest Fees = Best Loan Available?

There are many places that I can go with this but I just wanted to take a moment to ask you the following question:

Does the Lowest Rate and Lowest Fees = The Best Loan Available?

You have to be careful when you are shopping for a home loan of those that will offer you the lowest rate and the lowest fees at the same time. By nature the lower the rate the more the cost of the loan. The higher the rate the lower the cost of the loan. The reason is simple. It costs to get the best. There are many cases where you may get a low rate at a low cost but what type of loan did you get? 3 year fixed, five year fixed?

I would like to believe this is not happening in today’s market but it does. The other thing that still happens in today’s market is bad loans. Even though the scrutiny is way up there have been loans in the last year that have been made to low credit borrowers with little down payment or borrowed down payment. These loans were made with high Debt to Incomes and are a recipe for disaster. I expect to see several HUD foreclosures on the basis of these loans and continued job loss. A bad combination for those that had little to no savings and got into the home.

Loans are a lot like suits or fancy dresses. Loans have to be tailored to the individual and their specific situation. Your goals and dreams for the home will play largely into the decision of loan type, cost and structure. No two loans are ever alike. Even identical twins will get different loans because their situation is different. I mean you can buy a suit or a dress off the rack and it may fit but will it be the best fit for you? The answer is know.

How do you make sure that the combination you get is the right one for you? It starts with making sure that you are working with a professional that you are comfortable with. Ask questions, ask to see examples, ask them to explain and when they cannot answer a question do they get you the answer. My goal on every transaction is to make sure that my consumer understands every charge and expense and why we went with the loan program we did. We have a plan moving forward. I do not always accomplish this. Some consumers do not want to know all the details and ask that I give them only the basics. Those are the instances that I have earned the trust I presume.

The Best Loan Available for you is a combination lock with only one combination of rates and fees for you. Like I said no two deals are the same. If you are approached by a Loan Officer that says I have the lowest rate and fees available beware. They may very well have it but make sure that what they are selling is something you want. If you were to pass a Hot Dog stand and the vendor yelled out “I have the cheapest best Hot Dogs in town” you may or may not buy. It would depend on whether you were hungry, liked hot dogs and felt that the price was worth it.

I would suggest that everyone remember that if it sounds too good too be true it may be, however, you owe it to yourself to do your due diligence and make sure that it is the appropriate suit or dress for you.

Mortgage Definitions: Note or Promissory Note

Commonly we are asked to supply a copy of our note when we are refinancing our mortgage or applying for a second mortgage. Many times as a consumer we state what is a note? So I decided to post the definition here:

Note

A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Your note outlines the specific terms of the loan. When the loan begins, the maturity date, the interest rate and the sum. If it is an adjustable rate mortgage and the terms of the adjustments and if you have a pre-pay. The note can tell you a lot about your loan.

Where can I find a copy of the note?

Generally, you will have a copy of the note in the packet that the title company provided you at the time of signing. It will say not or promissory note at the top of the page. If you are ever in doubt contact your Loan officer and they should be able to guide you.

Until Next Time!