With the spring buying season here I’ve been getting a lot of calls from prospective homeowners looking for a mortgage. The first question I always get is “what’s your interest rate? “Not a wrong question but needless to say there is still someone who has a higher interest rate and a lower interest rate at any given time. With this being the most significant financial transaction of your life it’s far too important to place your trust in the hands of someone who is not capable of advising you properly. Here are four simple questions to ask your lender to make sure he or she is experienced enough to guide you through the loan process.
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 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. Contact me to receive an up-to-date calendar of economic reports and events that may cause rates to fluctuate.
3. When the Fed “changes 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 very short-term rate that impacts credit cards and lines of credit… but NOT fixed-rate mortgages. For more details, see my article called: How the Fed Impacts Mortgage Rates.
4. What is happening in the market today and what do you see in the near future? If a lender cannot explain and show you a picture of what’s happening with mortgage bonds and interest rates, you are probably talking with someone who is not experienced enough to handle one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life, but I do this every single day.
In summation, if a prospective buyer is only focused on the lowest rate, then I can honestly say that I’m probably not the best fit for you. It’s important, to be honest, and upfront and a true professional will deliver value in more ways than one.
About the Author
David Reznikow is a loan officer at Fairway Independent Mortgage. A Brookline native and BHS graduate, Reznikow is currently a Newton resident but has remained part of the Brookline community. As a Brookline Chamber of Commerce Director and business member Reznikow has had the opportunity to add to the vibrancy and diversity of the business community while helping to raise funds for local charitable organizations through many Chamber initiatives. Both Reznikow’s parents have businesses in Brookline, still live in the home where they raised three children, and can often be found playing with their grandson, Cameron, at Dean Park.
