Shop your Mortgage

One of the greatest injustices of the mortgage industry is the high commission some loan officers receive for originating a home loan. In many cases, it equates to 1.5% (or more) of the total amount of the mortgage. That’s a $4,500 paycheck for closing a $300,000 loan! And where does the money for those high commissions come from? Through an increase in your interest rate. This is wrong and unjustified, in my opinion.

My personal mission for City Creek Mortgage is to eliminate the over-compensated loan officer by educating consumers about why most companies charge such high interest rates. A loan officer on salary or a lower commission rate can save the consumer money—in most cases, a lot of money.

I’m NOT saying loan officers shouldn’t have the opportunity to make a great income. I believe that the ethical model is to earn a little off a lot of loan closings vs. a lot off a few. A higher-volume team with salary-based loan officers can provide a great living for employees as well as lower interest rates for borrowers.

If you’re shopping for a home mortgage, don’t be afraid to ask your loan officer about their personal commission rate. If they stumble over their answer, be careful. Look for a salaried loan officer and I bet you’ll find a better deal.

Recently it was brought to my attention that one of our closed clients was writing about their experience with City Creek Mortgage. This is far from a common REVIEW. It very well may be the first chapter in our soon-to-be-written book on The Perfect Client Experience. I am monumentally proud of my entire team for carrying out our vision so genuinely and for amazing clients like Kennie Christiansen and his fabulous wife Tracee for taking the time to articulate their experience. This was NOT paid for or even asked for which makes it PRICELESS! To read the full experience click here: kenniechristiansen.com/2017/01/03/best-utah-mortgage-company-real-estate-team/

 

 

I realize that the mortgage industry has created an environment where people feel they need to “shop” for the “best rate.” First of all, I want you to know that I guarantee that my team and I structure loans that will provide the lowest cost over the anticipated life of the loan. This means the rate I suggest may be lower or higher than the “quoted” rates around town. However, if it is higher, I guarantee that my recommended fees are lower to compensate for the higher rate. Realize that there is an inverse relationship between rates and fees, and I typically suggest a loan structure that is not typical for the industry (the way that “quoted rates” are computed.) Therefore, if you hear of a lower rate, do not conclude it is a better deal. You can rest assured that you are being advised by an accredited mortgage professional who understands your goals and objectives. In short, you are in very capable hands.

In the event that you do decide to “shop around,” I STRONGLY recommend that you consider several things. First: make sure you are working with an experienced, professional Mortgage Planner, not just a typical loan officer. 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. Second: make sure that your lender works for an established company, and that he or she has a “Team” of people working on your behalf who are specialists in what they do. There is nothing more frustrating than working with one person who has a busy schedule, is hard to get a hold of, who gives poor service, and allows unhappy clients.

Here are five simple questions your lender absolutely must be able to answer correctly.

  • What are mortgage interest rates based on?

    The ONLY correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT 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.

  • What is the next Economic Report or event that could cause interest rate movement?

    A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, call my office and request our latest “City Creek Mortgage Market Guide.”

  • When Ben Bernanke and the Federal Reserve “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. For more information and explanation, just give us a call.

  • 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.

  • What is your long-term plan to intentionally, and systematically ensure that I am ALWAYS in the best mortgage loan for my current and future situation?

    I have found that most lenders say they have a system for this, but when confronted and asked to show proof, they can’t. The truth is that most lenders do not manage mortgages and care for their clients in a way that saves their clients thousands of dollars over the life of the loan, nor do they truly understand how the largest debt you will ever have works into your long-term financial success.

Be smart… Ask questions… Get answers! More than likely, this is one of the largest and most important financial transactions you will ever make. You might go through this process only four or five times in your entire life… but we do this

The traditional approach to choosing a mortgage advisor can be extremely dangerous and cost you tens of thousands of dollars over the life of a loan. A mortgage is no longer just a means to allow you to own a home.

A mortgage is a tool that will either help add to your net worth or become a financial drain.

The foundation of a mortgage advising relationship should be trust coupled with advice. Although price is important, the lowest rate with the wrong mortgage strategy will cost you much more than a higher rate on a mortgage that best fits your individual circumstance. The ideal situation is to work with a Mortgage Advisor who is able to consider your overall financial profile and create a loan strategy that will move you closer to achieving your goals and objectives.

Interest Rates

Many people do not realize that mortgage rates are continually changing, minute by minute. In the time it takes to shop interest rates, the rates provided by prior lenders may no longer be available. If you work with a reputable Mortgage Advisor that you trust and who has a system for monitoring the markets to know when it is best to lock in your rate, chances are you will receive the great rate you are looking for.

Internet Lenders and Banks

Many banks and internet mortgage companies hire order takers to walk you through the mortgage process. A Professional Mortgage Advisor does not cost any more than an order taker and will provide insight and mortgage management that is not offered by transactional institutions.

Mortgage Management

Very few mortgage lenders have a system to manage clients and their mortgages after closing. You should only work with mortgage professionals who have a system that continually ensures you are in the proper mortgage based on the market and your evolving financial circumstances, as well as adds value to you beyond just your mortgage needs.

As you consider your options of lenders to help you with your next home, I invite you to call me for a no-fee or obligation consultation. My goal is to help you make informed decisions and to create a plan that is in-line with our overall goal of creating financial peace in the families we serve. To arrange a consultation, call my office at 801-501-7950 or e-mail me at mike@citycreekmortgage.com.