The Worst Thing to Ask When Shopping for a Mortgage

I was talking with my favorite loan officer last week and she told me that many people make a huge mistake when shopping for a mortgage for their new home or when refinancing their old one. What is that mistake? According to Mona Campos at Waterstone Mortgage, the first question they ask is, “What is your rate?”

Well that seemed like a pretty sensible question to me, so I asked her what she meant. She explained that there’s a lot that goes into determining your personal rate, and any answer you get to that question isn’t a good one until you’ve had a thorough discussion of your situation with the loan officer. The loan officer will need to ask you about your credit, the amount you’re putting down, your debts and cash reserves, and the stability of your income before determining a true and accurate rate.

There are other important factors to consider in addition to the rate. For example, what fees are charged by the lender? Not all fees are negative and paying a little more now can sometimes save money later, but you have to know what the fees are and understand them. Another consideration is the variety of programs that are available from the lender. While many homebuyers just want the lowest rate possible there are many who are looking to pay off that mortgage as soon as possible. A mortgage with a 20-year term may be more advantageous if your goal is to build equity as quickly as possible.

Finally Mona advises that it’s important to know who you are dealing with when shopping for home financing. You should know not only the mortgage company, but also the qualifications of the person who’ll be taking you through the process. If your loan officer can’t put your loan request together in the right way, it is more likely that something could happen to create stress in the process, change your rate quote, or even cause the loan not to go together.

A rate quote may make you feel good, but it would be better if you had the right information to help you achieve your short and long-term goals.