Is the Lowest Interest Rate Always the Best Option?

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Is lowest always best? All things being equal, of course paying the lowest interest rate would be the best option, but there all kinds of scenarios where this simply isn’t true.

We don’t want to create unnecessary fear, but you only have to go online and do a little digging to see that the experience people have when buying a home and getting a mortgage is far from uniform. There are all kinds of stories about missed deadlines and false promises. You might have terrific credit, or be principled enough to say that you’ll walk away if the numbers change, but as you’re getting ready to move your family into a home and you’ve already invested as much as $1,000 for things like appraisals and inspections, sometimes it just doesn’t happen.

The first and most important thing to remember is what you see is not always what you get. Whether that’s missing contract deadlines, missing closing dates, or the mortgage lender just misquoting certain things, there are some mistakes you just can’t be protected from. The other important thing to consider (which is often overlooked) is that many mortgage people act in a very transactional manner. Their goal is to get you to do business with them. They may present some options or numbers that might not be in your best interest, but you’re most likely to accept anyway because you’re assuming a low interest rate is great no matter what.

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What you see is not always what you get.

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There are all kinds of scenarios, though, where a different loan product or term might be better. I’ve had situations where I’ve actually gone with a higher interest rate but much lower closing costs because that kind of arrangement might be better for a person who might not be keeping a home for a long time. It’s a difficult conversation to have with a borrower to convince them to accept a higher rate in exchange for lower closing costs, but we can always run through those numbers to explain why it would make sense to them in the long run.

If you’re looking for a mortgage lender with competitive interest rates, individuals that will take the time to understand your particular situation and make appropriate recommendations, and a local team that has a track record of delivering on their promises and their timelines, reach out to myself or someone on our team at the number listed below and we’d be happy to help you out.

New Mortgage Rule Could Hurt Your Mortgage Qualifications

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Recent changes have affected the way that student loan payments will factor into FHA mortgage qualification, and it affects a lot of people looking to buy homes.

Prior to September 2015, if you had a student loan debt in deferment at least 12 months past the closing date, those debts weren't counted against you as far as how much mortgage you could qualify for. The rule that changed last fall now states that if a payment is in deferment or the payment is zero (like an income-based repayment plan), they now require us to use 2% of the balance as a payment toward your debt ratio.

So what does this mean? If you have $50,000 worth of student loans in deferment, that is the equivalent of $1,000 a month that we now need to count against you as far as how much you can qualify for. That's almost like a whole other mortgage payment. Obviously, this has had a huge impact on people, especially those with large student loan debt loads.

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Don't let this change keep you from getting into your next home.

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There are some workarounds however. Even though a student loan debt is in deferment, we've had some successes contacting student loan companies and requesting to get an estimated payment of what the payments would actually be once the deferment expires. In many cases, that payment is far less than the 2% payment that we have to use if we don't have any payment at all. In those cases, we're able to use that estimate because the lender at least has an idea of where that payment is going to be once the deferment is over.

So like I always say, the best thing to always do is to get out ahead of the home buying process. If you have student loan payments, reach out to us early in the process and come in for a consultation where we can review and see where we stand. Then we can see if we can come up with some solutions to make sure this change doesn't keep you from getting into your next home.

Has TRID Really Affected Mortgage Closing Times?

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Last October, TRID was enacted to regulate the mortgage process. With new rules, regulations, and timelines, many people feared that it would take longer to close a mortgage.

Although many people worried that TRID would prolong the mortgage process, it hasn’t added much time to mortgage closings for the better lenders. Although TRID made the mortgage process more complex, the companies that have always done well will continue to do well while the companies that used to struggle will continue to struggle. We see this as a great opportunity to separate ourselves from the competition.

As a consumer or referral partner, TRID reinforces the fact that you want to work with a great mortgage professional when buying a home.

In February 2016, the official industry standard was an average of 47 days to close a mortgage purchase. Many lenders can close much quicker. Our Newtown Branch average close time is 28 days. By working with us, you can cut that industry standard (47 days) in half. We have no trouble hitting deadlines thanks to our great underwriting and processing team. Everyone's goal in our branch is to meet or exceed closing dates.

We like to meet and exceed deadlines to raise the bar. We have even closed in 17 days post-TRID. That is not standard, but we can absolutely close in 20 to 25 days if you need us to. As the market heats up and multiple offers are more common, our quick closing time is a significant competitive advantage to you. 

Keep in mind that every loan is unique. If you have very complex tax returns or extenuating circumstances, it’s always a good idea to check first. However, in a vast majority of situations we can close in 30 days or less.

If you have any questions, give us a call or send us an email. We would be happy to help you!