A home loan is the largest loan you will ever get. Getting the wrong loan or working with the wrong adviser can result in a $100k difference over a ten year period or more. My business is built on creating the best possible service, product and process for my clients. I have used the following principles in creating my business and I will continue to use these tactics to get you the best mortgage rate.
1.) Work with a Company that offers competitive rates
The key to finding the companies that offer the best rates is finding a company that is large enough to receive the best wholesale pricing and yet small enough that expenses remain low. Loans are bought and sold much like any other product where as the more quantity you can bring to the table the better pricing you can receive. Our direct Lender is Pinnacle Capital Mortgage who closed 7.6 Billion in mortgage loans 2012. Obviously the big banks in our country are funding quite a bit more and thus can receive better pricing upon selling those loans. But this doesn’t tell the whole story as those larger institutions pay for branch locations on every corner across the country. Those large expenses off set their better pricing. Our direct lender Pinnacle Capital Mortgage has a small footprint and thus lower expenses. This combination of high volume and low expenses is why we fund the majority of our loans through Pinnacle Capital Mortgage and why we can offer the best rates.
2.) Choose a Rate that is in the Sweet spot
Your interest rate can be done at any 1/8 in the current markets range. So you might get a rate of 4.125, 4.25 or 4.375 and each one of these rates is going to offer you a different cost or rebate depending on the market that day. The lender offering the rates often creates a sweet spot where they are charging a little less or rebating a little more to drive loans to these specific offerings. I always compare these costs and present you with the option that is in the sweet spot.
3.) Know Your time Frames and Break even
The average person in the United States lives in a house 4.5 years but just using this statistic could cost you thousands. When picking your interest rate, your time frame in the house will help you choose whether to take a higher rate and more rebate from a lender or a lower rate and pay more upfront to save over the long term. If your moving into a house that you plan to stay in forever you might take a 4% loan and pay an additional $7500 to get the rate down to 4%. While someone who plans to stay 3 years or less and move into something larger might take a 5% rate with a $3500 rebate. Meaning the borrower taking the 4% rate has $11k in closing costs to the 5% $0 in closing costs. After 47 months the borrower at 4% has recovered all of his closing costs. Over 30 years the 4% borrower has saved an additional $85k. Yet if the borrower at 5% really did move in 3 years or less he has done what was in his best interest. I always find out your time frame in the home and show you where your breakeven is to determine which rate and loan is best for you.
4.) Close on time and overcome obstacles
Nothing can cost you more than getting a house under contract and not being able to close the transaction on time. You run the risk of losing you deposit, losing the house or paying daily extensions. I close loans in 30 days or less. I communicate with you and both agents during the transaction with an e-mail that explains or progress. I ask questions upfront to uncover potential problems and honestly inform you of problems right away. I never allow contingencies to be released without 100% confidence that your loan will close.
5.) Broker niche loans to the best place
Certain lenders have specialty products priced way below anyone else in the market. A lender may specialize in interest only products, while another in arms and another in rehab loans. I keep a close eye on who is priced best for your preferred loan solution and broker the loan to the appropriate lender.