The one million dollar question. Should you talk to a realtor first and find out what houses you could buy or should you speak to a loan officer first to get your financing options in place?
- Speak to a loan officer first. Time again, I get consumers coming to me after they found a house and need to settle on it prior to being qualified for a mortgage. Don't you want to know what your payment is? What it might cost you at settlement? Never assume.....
Just a FYI : FHA loans might even be your easier way into a home nowadays. I still have some loans officers that tell me differently or the consumer differently. There are now even penalties if you have a credit score below 720. Yes, 720. If your lender is not FHA approved, how do you know that you are getting the nest possible mortgage? Besides, FHA loans are another way to get into the home with little or no money out of pocket.
Overall, you need to have a slight understanding of what types of mortgages are out there as you speak to a loan officer. So, now onto the top 10 questions that should be asked when being pre-qualified for a mortgage.
PS.... Top 10 lists or in this case, the top 6 list, usually start with the higher number first and work their way backwards. But I wanted to emphasize what was truly important.
<!- 1. What kind of mortgage payment would you be comfortable with monthly, to include your taxes and homeowners insurance. (In my 15 year opinion, this is and should be the most important question.) Don’t get hung up with interest rate. An order taker, your basic loan officer, makes you focus on this instead, because anyone can give you a rate.
<!- 2. What are your goals for purchasing this home or for refinancing? Do you plan on being in the house for 5 years? 10 years? Have kids in school? Have kids going to college? Will you be retiring soon? Financial planners ask these questions and so should a mortgage loan officer. Why? A certain mortgage program might be better suited for you. Paying points vs not paying them could be important. The Myths behind ZERO point mortgages instead of paying points upfront......
<!- 3. Good Faith Estimates : My biggest pet peeve in the business. If a loan officer takes the time to pre-qualify you by asking you questions and pulling your credit, and they end up giving you a rate, payment, and how much you need to close, they should be able to supply you a good faith estimate within that next hour. Why can I say this? Because in order for them to give you rate, payment, and your total costs, they would have had to plug this into their system. If it takes them more than 24 hours, this is a major red flag. (it’s at their finger tips and most people have e-mail or fax machines)
<!- 4. Asking the consumer basic questions such as : your income, assets (cash on hand – how much you want to use and what you would have left over), if you rent or own, etc, etc
<!- 5. Asking you if you have ever had any bankruptcies & foreclosures, because they always don’t show up on credit, but would show up on title.
<!- 6. Asking if you pay or owe child support. Or if you receive payments for alimony or child support.
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Conclusion : Keep in mind, any time that you speak to a loan officer, they should ask you these questions. Otherwise, that what and or fees that were quoted, usually won't mean a thing. It only takes about 15 to 20 minutes, which if done properly, will make your transaction much smother. Print these questions out to follow along when speaking to your loan officer. Don't hesitate to ask them why they didn't ask you any of these questions, but were able to quote you rates and programs. And here is a must read : Consumers need to be aware of these Red Flags !!!!!
Jeff, great list. Your number 1 is my main question when talking with customers. Then I send them to get pre qualify.
Jeff, simple enough, the more questions you ask, the more you get to know your customer, the better you can help them. It also gives the LO a map of what type of customer they are dealing with and let's them control the situation. Very professional....I expected nothing less. Thanks
Great information, Jeff. I always tell buyers to gather this information before they start looking so they really know what their budget is. What they can afford and what the bank says are two different things. I may write another post on this issues for my frst time buyer blog - thanks for the inspiration. And bookmarked.
Jeff
Jeff - Simple enough and very to the point. Good tutorial for consumers to read and digest before shopping for a mortgage. This covers the basics and beyond.
Jeff,
I still think the Title Company should be your first call!!! But then again, I'm a title guy!!! Thanks, Fran
Jeff,
Thanks for the list. These are all great points and I definitely agree with #3. If they can't get you something within 24 hours, they don't deserve the business.
FRANK.... I think it should be everyone's number one and first question. But many of the average loan officers are just worried about keeping the deal, they will throw rate out there constinently. And the consumer loses sight of real service and value in their loan officer. Just my opinion...
BO.... you hit the nail on the head.... giving us a map or outline to what we can do for the client. Other than that.... here's your rate with no fries, coke, or ketchup. And thanks for the polite compliment.
JEFF D. .... that's important, to gather this information. But from my experience, unless they have been through this mulitple times, they won't know what to have available. A very good loan officer will walk them through this process. And in regards to what you might write later with regards to this topic, I look forward to it. And thanks for the compliment.
JASON..... yes, trying to keep it simple. There is enough confusion out there with loan officers giving false information. I had one over the weekend, that was qualified for the last 3 months, then just told that they can't get a home. But after digging further, the excuse that was given to them would have been irrelevant. There was another issue that I discovered, but never brought to their attention. And probably because the loan officer didn't know.
FRAN..... what's title? And why do they need it? lol I would suspect that you would be 3rd or 4th down the line. Sorry, but you know the drill. ;o)
JOSHUA & KATHY..... number 3 kills me. When I speak to a client who was qualified by a lender and it's been a few days... and no good faith estimate? And then I tell them to go back to the loan officer and it takes anbother 2 to 3 days? Major, major red flag....
Jeff great list and as for #3....... an hour that is a long time when every thing is already pluged in.....
I would add (becuase of my market) What typr of home you are looking to purchase or refi?
I love the ones that are looking at a manufactured home and there is no foundation inspection figured in also.........
Jeff- your are absolutely correct. If they haven't spoken to a mortgage professional and gotten pre qualified. My car doesn't burn gas.
Well done Jeff! A great post and a great list! Most of the time I start with number 2 then to 1 and on down the list.
Jeff,
Without Title Insurance there is no secondary mortgage market...no title...no mortgages...think about that! LOL Thanks, Fran
P.S. New times bring 'new drills'...LOL
Thanks Jeff. I'm studying for my LO license and these will be great questions to ask my clients.
Jeff, once again... valuable consumer content that should be exclaimed from the rooftops. rock and roll buddy!
Chris the implementer
Great input Jeff. I wish more lenders did this. My buyers are much happier when they are explained the process. No one likes surprises. Thanks!
Thanks Jeff. I like your posts. As a mortage guy I can appreciate the basic information.
Jeff, Your opening statement on speaking to a loan officer or a Realtor first is something I preach to consumers. I tell them trust me if you don't know what you can afford you'll fall in love with a house that's way out of the budget.
NN