Second Mortgage

You can call a few mortgage companies and ask for a rate and it’s a huge mistake and a total waste of your time.

Every mortgage quote, every situation is different. How long are you keeping the loan? How long are you staying in your home? What are your long-term goals? What about income? Do you qualify? You might think you do, but to continue using the doctors as an example, I actually had a doctor making over $300,000 a year he’s got to qualify for income right? No, he didn’t qualify.

Why? He had huge monthly payments on all his other debt so he didn’t qualify. He thought he’d qualify full income, but he’s a doctor, not a mortgage planner. I don’t necessarily call him up and say listen, I know that I don’t need surgery on my shoulder just prescribe some anti-inflammatory medicine. He’d laugh at me.

So when talking about shopping for a loan, how should you do it? Well, first of all, you want to sit with a professional mortgage planner. You want to discuss your needs, your goals, and your plans. You want to design a strategy, not just call and ask what a rate is. You really need to bring in all your paperwork, two recent pay stubs, two years W-2s, two years tax returns.

You want your planner to look at your tax returns so he can do a tax analysis to see how a new mortgage will affect your take home pay. Your planner needs to see bank statements or assets, and your planner’s should send you a list of everything he or she might need. You want your planner to give you a few options and you want to get Good Faith Estimates on all of those options.

Here’s the thing, when somebody quotes you some numbers, like rates and fees it’s not worth the paper that it’s not written on. For example, maybe you’re going to get a two-year or a five-year adjustable rate mortgage. A two year adjustable is fixed for two years and then adjusts. A five-year adjustable is fixed for five years and then adjusts. Maybe your best option is a straight 30-year fixed rate loan.

You want to get some options on that. You want to look at points. I’m not going to go into detail here on why you should or should not pay points, but paying points might benefit. It might pay to pay points. The longer you expect to keep the loan, the better it is to pay points. Again, you want to get options, you want it all explained to you.

Then, if you want to shop around, you need to do the exact same thing again. Most people think “that sounds like a lot of work”. Well, it is a lot of work but isn’t it worth it for the single largest transaction of your life?

So why don’t people do this? Well, I think it’s obvious, it’s too much trouble, too much work, and really, who has the time? Look, we spend all day at work, you get home and you want to relax. That gives us our weekends. Well, on the weekends we need to go with the kids to hockey practice or soccer practice, or we just want some down time, which is totally understandable.

So what’s the easiest way to shop for a mortgage or so it seems? Make a bunch of phone calls looking for the lowest rate. Go online, get a few rate quotes. Now, how many people reading this article got burned by looking for the lowest rate? You were promised one thing and then got another.

The problem is who do you ask for advice? You ask your mom and dad, friends, co-workers, other family members for mortgage advice. You’re not asking for a referral, because they got burned too. You’re asking what kind of mortgage to get, what’s a good rate, should I pay points, etc.

The scary part of all this is, how the heck would they know? How many mortgages have they done, one, two, maybe three? I’ve helped more than 1,357 people get home loan, which is why I’m an expert. Your friends, your family, your co-workers, they don’t have the experience of a professional mortgage planner.

So you’re asking people that you’re most comfortable in asking, which I understand, but again, you want to ask the professionals. Not somebody who had a mortgage or two.

A mortgage is the single largest transaction of your life. Shouldn’t you spend some time designing and planning it? Not just making a couple of phone calls to shop for a rate? How can it be too much trouble to do it right?

If you do it wrong, it’s more trouble, it’s more expensive, especially if you get burned and you find out the real story at closing. If you didn’t know you were getting a two-year adjustable that is not designed properly, it’s almost guaranteed to go up. You’ll have to refinance in two years.

Did you save money by getting the lowest rate? Did you save money by going to the wrong person? Of course not, it cost you more money. You need to find the right planner. How do you do that, you might ask. Well, it’s simple.

Make sure you only work with a member of NARLO, the National Association of Responsible Loan Officers. Don’t work with anyone who doesn’t need at least 30 minutes of your time to sit with you and go over a plan whether it’s in person, which is always preferable, or over the phone.

Anyone who doesn’t want to spend time with you is not looking to help you. They’re just looking to make a fast buck at your expense. Think about it. The faster the loan officer can get you off the phone and sell you a loan, the faster he or she can move on to the next person. That’s just not the way to do it. Be careful when shopping around for the best rate!