The Right Questions Can Save Homebuyers Thousands of Dollars Says Guardian Mortgage Company

Online, May 23, 2011 (Newswire.com) - Free consumer information helps hopeful homebuyers find the right lender for their situation

Many homebuyers have paid dearly the past few years for their ignorance of how the mortgage industry works. New consumer protections promise to make it easier for homebuyers to get fair loans and to compare costs among lenders but there are still a lot of questions for a homebuyer to get through during the loan process. Guardian Mortgage Company is offering a free 34-page handbook that clearly explains the terms, types of loans and loan nuances that can save well-informed homebuyers thousands of dollars on one of the biggest purchases of their lives.

The excerpt from the handbook below goes over questions to ask when selecting a lender.

It seems clear to many that their most important concerns should be that they are working with an experienced professional who is employed by a well-established, credible company. In addition, buying a home is much too important to be put in the hands of an inexperienced loan officer or questionable company.

So far so good, but how do you know if you are dealing with the right loan officer and company? The best way is to ask the right questions of the loan officer and make sure that the correct answers are given. The following are a few of the questions that should be asked of each potential mortgage lender.

1. Are you a mortgage banker or mortgage broker?

There are very distinct differences between a mortgage banker and mortgage broker that can affect every step of the loan process. A mortgage banker lends from its own funds and will most often have in-house processing, underwriting, and closing departments. A mortgage broker is a "mortgage salesperson," but the broker's company will not be lending you its own funds. The mortgage broker has a variety of lenders that may provide funding for your loan. The selected lender will complete your loan processing, underwriting, and closing documents. In addition, the customer will not be aware of the actual rate, costs and points charged until the broker has selected a lender for the specific loan offered. New changes in regulations mean that commissions can no longer be hidden in the rates and many consumers may find that brokers actually cost them more than a lender when they are able to compare them side by side.

2. I understand that the Good Faith Estimate is just that, an estimate, however, can you tell me which items are most likely to change and to what degree?

It is the loan officer's responsibility to provide you with the most accurate Good Faith Estimate possible. As of January 1, 2010, the government has standardized this Good Faith Estimate and made the lender responsible for the accuracy of many of the fees and charges on this document. There are specific dates at the beginning of the Good Faith Estimate which provide guidance as to how long they can honor the rate and fees provided on the Good Faith Estimate. Please be sure you understand whether or not your rate has been "locked" with that lender - meaning the lender is committed to close your loan at that rate - or if the rate is subject to change prior to closing. The loan officer should explain to you which items on the estimate are charged by the lender and which are charged by third parties (title company, appraiser, surveyor, etc.). In addition, the loan officer should provide you with an explanation of which items cannot change, which items can change within a 10% tolerance and which items are not subject to any tolerance for change.

In addition, make sure that you are aware of any origination charge or points that are being charged related to your loan rate. The origination charge is a total of all lender fees, which used to be itemized on older GFE formats, and should be inclusive of all closing costs related to the lender including the wholesale lender fees with a mortgage broker. Make sure your financial partner explains every line of the new GFE to your satisfaction. If they are not willing to take the time, then you probably do not have a good lender.

3. What financial products determine mortgage rates?

The only correct answer to this question is "mortgage-backed securities" or "mortgage bonds." The 10-Year Treasury Note is not the correct answer, although this financial instrument may follow the same trend as mortgage rates. However, it is not uncommon for the 10-Year Treasury Note and mortgage rates to move in opposite directions. If your lender doesn't know, then they are not very experienced.

4. Are there any economic reports or events in the near future that may cause mortgage rates to move?

Various economic reports and events can cause mortgage rates to move in either direction. An experienced, professional lender will know which of these will affect mortgage rates, although it would be impossible for to predict the outcome of these reports or events and the resulting mortgage rate movement. Recent broker commission regulations that went into place April 1, 2011, for example, may contribute to raising rates as some brokers leave the industry.

5. When the Fed "changes rates," what does this mean, and how does this impact mortgage rates?

The Fed (FMOC - Federal Open Market Committee) is the policy-setting panel of the Federal Reserve Board. The Fed can only control two specific rates, the "Federal Funds Rate" and the "Discount Rate." Both of these rates are very short-term rates that influence bank lending rates for credit cards, consumer loans, credit lines, etc. It is common for mortgage rates to move in the opposite direction of Fed rate adjustments immediately following a change. The Fed adjusts rates to combat inflation, which is typically the worst enemy of the bond market on which mortgage rates are based.

6. Will your company service my loan?

The company that services your loan will be your ongoing mortgage relationship after the loan closing. This servicer is responsible for the collection of your monthly payments, the management of your escrow account and the issuance of those funds for insurance and tax payments, the delivery of required annual interest statements (1098 Form), and is the customer service contact for any questions or issues related to the loan.

It is important for you to know if the company you chose as your mortgage lender will be servicing your loan after the closing. If not, you will have no choice of whom your loan servicing will be sold to or when it is sold. Therefore, you will have no idea who will be providing the ongoing customer service related to your loan after the closing or even what part of the country your mortgage payment will need to be sent in the future.

Ideally you want to choose a lender who will also service your loan. You will get better service before, during and after the close of your loan if your relationship will be in place for 15 or 30 years.

If you are in North Texas or in the area of Michigan between Flint and Detroit (including those two cities), please feel free to contact one of our mortgage experts at the numbers below with any questions. Unlike a mortgage broker who shops your loan around among various banks, Guardian Mortgage Company is a mortgage banker that services its own loans through the entire relationship of the loan. Our loan originators will ask you questions that help determine what kind of loan is best for your situation.

About Us

Guardian Mortgage Company, Inc. has been in the mortgage lending and servicing business since the 1960s. It is an independently owned and managed company that specializes in origination and servicing residential mortgages. For more information about Guardian Mortgage Company Inc., you can reach one of our mortgage experts through the contact details below:

North Texas - (800) 331-4799
East-Central Michigan - (800) 237-7905
Apply online http://bit.ly/iKJP2N
Free handbook: http://scr.bi/guardianhandbook