Questions to Ask a Lender

A word from Cyrus Shargh

 Make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place in the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. Here are four questions your lender should be able to answer. If they can't, find a lender who can!

1) 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.

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

A professional lender will have this at their fingertips. For up to date economic reports, please click here for a copy of my weekly newsletter. Please let me know if you would like to be added to my distribution list.

3) When Ben Bernanke and the Fed change rates, what does this mean?

What impact does this have on mortgage interest rates? The answer may surprise you. When the Fed makes a move, they can change a rate called the "Fed Funds Rate" or the "Discount Rate". These are both very short-term rates that impact credit cards, credit lines, auto loans and the like. On the day of the Fed move, Mortgage rates most often will actually move in the opposite direction as the Fed change. This is due to the dynamics within the financial markets. For more information and explanation, just give me a call.

4) 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 in real 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. Would you work with a stockbroker who is only able to grab yesterday's paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!

Be smart, ask questions, get answers!

This is likely one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your life, but we do this every day. It's your home and your future. It's our profession and our passion. We're ready to work for your best interest.