Comments on: 5 Steps for Shopping Mortgage Interest Rates http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/ Seattle's Leading Resource for Real Estate Information Sun, 08 Nov 2009 01:47:42 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Rhonda Porter http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-118303 Rhonda Porter Mon, 02 Apr 2007 04:05:02 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-118303 To add to Jay's comment, I've bailed out many consumers who thought they were getting a "better deal" via the internet...to find out this was not the case. Of course, it's not often that I hear of success stories, like Proteus. To add to Jay’s comment, I’ve bailed out many consumers who thought they were getting a “better deal” via the internet…to find out this was not the case. Of course, it’s not often that I hear of success stories, like Proteus.

]]> By: Jay Matthews http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-118279 Jay Matthews Mon, 02 Apr 2007 03:20:02 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-118279 Proteus - to echo Rhonda, your point about eTrade and eLoan being the best is definitely subjective. It really comes down to where an individual consumer places value - you place value on getting the "best" rate. Others may place value on making a personal connection with a live person who's willing to walk them through the process. Proteus – to echo Rhonda, your point about eTrade and eLoan being the best is definitely subjective. It really comes down to where an individual consumer places value – you place value on getting the “best” rate. Others may place value on making a personal connection with a live person who’s willing to walk them through the process.

]]> By: JD Blackwell http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117665 JD Blackwell Sat, 31 Mar 2007 19:06:00 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117665 I think that's because 99.9% of the consumers out there are pitifully ignorant of how it works. If they knew and understood just how much it impacts them I think they'd be screaming bloody murder. Oh well, I guess you can't let real life get in the way of the next broadcast of American Idol. I think that’s because 99.9% of the consumers out there are pitifully ignorant of how it works. If they knew and understood just how much it impacts them I think they’d be screaming bloody murder. Oh well, I guess you can’t let real life get in the way of the next broadcast of American Idol.

]]> By: ARDELL http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117636 ARDELL Sat, 31 Mar 2007 16:44:10 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117636 "Maybe it’s time to start educating our legislators about this kind of practice." I honestly thought there would be a huge public outcry the minute FICO scoring became the be-all-end-all to the interest rate one would be subject to. But no. The Legislators got behind "explaining it better to the consumer" and in some states, getting a free report once a year. But unfortunately, not anything more than that. “Maybe it’s time to start educating our legislators about this kind of practice.”

I honestly thought there would be a huge public outcry the minute FICO scoring became the be-all-end-all to the interest rate one would be subject to. But no. The Legislators got behind “explaining it better to the consumer” and in some states, getting a free report once a year. But unfortunately, not anything more than that.

]]> By: Rhonda Porter http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117628 Rhonda Porter Sat, 31 Mar 2007 15:58:34 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117628 Credit scoring is one of my biggest pet peeves. Add to that, the big three credit bureaus reselling your information the moment you have your credit pulled from an LO. Your clients start getting calls from LOs (so low they have to buy leads) with all of your client's information (what's on the credit report) provided to this LO. If you're going to call your US rep, be sure to bring up Trigger List. http://www.raincityguide.com/2007/01/24/your-private-information-is-for-sale/ Credit scoring is one of my biggest pet peeves. Add to that, the big three credit bureaus reselling your information the moment you have your credit pulled from an LO. Your clients start getting calls from LOs (so low they have to buy leads) with all of your client’s information (what’s on the credit report) provided to this LO.
If you’re going to call your US rep, be sure to bring up Trigger List.

http://www.raincityguide.com/2007/01/24/your-private-information-is-for-sale/

]]> By: JD Blackwell http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117625 JD Blackwell Sat, 31 Mar 2007 15:50:46 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117625 So there are a few catch 22's in the system. Trade one credit card for another with better rates, terms and service and you get a hit for closing the old account then you get another hit for "new" credit. Add to that hits for too many inquiries. It's all counterintuitive to what a smart consumer would do. Why? There's no doubt in my mind that the reporting agencies exist for the benefit of the credit industry and that these policies specifically benefit the credit industry for no rational reason. Maybe it's time to start educating our legislators about this kind of practice. To end let me say that I know this kind of thing doesn't originate from the level that you work the the industry but you get stuck working to those arbitrary parameters. DOn't you think rational rules would be good for you? Maybe you should be emailing your US representatives as well. So there are a few catch 22’s in the system. Trade one credit card for another with better rates, terms and service and you get a hit for closing the old account then you get another hit for “new” credit. Add to that hits for too many inquiries. It’s all counterintuitive to what a smart consumer would do. Why? There’s no doubt in my mind that the reporting agencies exist for the benefit of the credit industry and that these policies specifically benefit the credit industry for no rational reason. Maybe it’s time to start educating our legislators about this kind of practice. To end let me say that I know this kind of thing doesn’t originate from the level that you work the the industry but you get stuck working to those arbitrary parameters. DOn’t you think rational rules would be good for you? Maybe you should be emailing your US representatives as well.

]]> By: Rhonda Porter http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117623 Rhonda Porter Sat, 31 Mar 2007 15:40:04 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117623 “…getting qualified once before you buy locks you into whatever changes the wholesale lender’s underwriting department comes up with” Getting qualified does not lock anyone into a program. Typically the loan has to be locked to guarantee the u/w guidelines. Ardell, if the loan is anything but vanilla, then JD is correct. Especially with the current market conditions. I'm getting guideline changes sent to me daily and not just from subprime lenders--this is a paper, fannie and freddie guidelines. If you have buyers who are: stated income no/low doc 100% financing credit scores below 680 utilizing second mortgages (lenders are not wanting to be in second lien position due to lower lien rights in case of foreclosure) The guidelines may change. Homecomings (GMAC) sent a memo out trying to reassure us (lenders) that they will honor the current loans in the system that are locked and in their pipeline. Greenpoint ahs stopped doing 100% loans all together. Greenpoint is an alt-a lender (not supbrime). Homecomings is alt-a and subprime. A paper lenders have tightened up guidelines for anything that is not full doc and higher ltvs. It's not a game the loan originator is playing. LOs need to stay up on all the guideline changes that are coming on hard and fast. You want to use a lender who stays informed of underwriting guideline changes and has options available in case "plan a" disappears while your buyer is shopping for a home and before they are locked into a loan. I am having this happen to me and believe me. I'm NOT playing any games. I do not profit from switching loans around. It's a lot of my time and concern. With my client's they were not able to lock in with the lender (this lender did not allow long lock periods) and once we were within range...bammo--no more second mortgages for this type of documentation. I've found a new home for the buyers second mortgage...it's not fun and not a game. It's real. Not to mention, with the alt-a/sub prime sector, if the lender just decides to call it quits or is forced to close up shop. New Century. Those buyers with loans waiting to be funded by New Century were left in a total lurch. Even the lock didn't help them. “…getting qualified once before you buy locks you into whatever changes the wholesale lender’s underwriting department comes up with”

Getting qualified does not lock anyone into a program. Typically the loan has to be locked to guarantee the u/w guidelines.

Ardell, if the loan is anything but vanilla, then JD is correct. Especially with the current market conditions. I’m getting guideline changes sent to me daily and not just from subprime lenders–this is a paper, fannie and freddie guidelines.

If you have buyers who are:
stated income
no/low doc
100% financing
credit scores below 680
utilizing second mortgages (lenders are not wanting to be in second lien position due to lower lien rights in case of foreclosure)

The guidelines may change. Homecomings (GMAC) sent a memo out trying to reassure us (lenders) that they will honor the current loans in the system that are locked and in their pipeline. Greenpoint ahs stopped doing 100% loans all together. Greenpoint is an alt-a lender (not supbrime). Homecomings is alt-a and subprime. A paper lenders have tightened up guidelines for anything that is not full doc and higher ltvs.

It’s not a game the loan originator is playing. LOs need to stay up on all the guideline changes that are coming on hard and fast.

You want to use a lender who stays informed of underwriting guideline changes and has options available in case “plan a” disappears while your buyer is shopping for a home and before they are locked into a loan.

I am having this happen to me and believe me. I’m NOT playing any games. I do not profit from switching loans around. It’s a lot of my time and concern. With my client’s they were not able to lock in with the lender (this lender did not allow long lock periods) and once we were within range…bammo–no more second mortgages for this type of documentation. I’ve found a new home for the buyers second mortgage…it’s not fun and not a game. It’s real.

Not to mention, with the alt-a/sub prime sector, if the lender just decides to call it quits or is forced to close up shop. New Century. Those buyers with loans waiting to be funded by New Century were left in a total lurch. Even the lock didn’t help them.

]]> By: Rhonda Porter http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117617 Rhonda Porter Sat, 31 Mar 2007 15:17:50 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117617 JD, regarding comment 22. Obviously I've never seen your credit report. One possibility that comes to mind is if you're not using your credit. Then the credit scoring systems considers the accounts closed and your scores will lower (if there are no other changes) over time. You would think a consumer would be rewarded for not using credit or for closing their accounts when they're done with their credit, this is not the case. The scoring system wants to see that consumers are responsible "users" of credit. When I prequalify someone, we review their credit report to see if there is anyway they can improve their scores (or keep them at optimum). I often advise such clients to keep the older credit cards open and, if there's no balance on the card, to buy a tank of gas and then pay it off. You don't have to charge much to have your credit register as active credit. The other culprit for bringing down scores of responsible credit users is if you consolidate your credit cards onto on card. Let's say you're offered an incredible low rate and you take two older cards and combine them onto one new card. This can ding your score if: 1) new debt is unfavorable to your credit 2) if you closed the old accounts (scoring system prefers older established debt) 3) if the new debt amount on the card is over 30% of the credit line amount Of course, you probably know this, there's the new car loan slap to your credit score. (I just explained this to a client and they exclaimed "but it's a used car!" :) ) Again, you may not have had any of these circumstances happen to you to cause your credit score to lower JD, regarding comment 22. Obviously I’ve never seen your credit report. One possibility that comes to mind is if you’re not using your credit. Then the credit scoring systems considers the accounts closed and your scores will lower (if there are no other changes) over time. You would think a consumer would be rewarded for not using credit or for closing their accounts when they’re done with their credit, this is not the case. The scoring system wants to see that consumers are responsible “users” of credit.

When I prequalify someone, we review their credit report to see if there is anyway they can improve their scores (or keep them at optimum). I often advise such clients to keep the older credit cards open and, if there’s no balance on the card, to buy a tank of gas and then pay it off. You don’t have to charge much to have your credit register as active credit.

The other culprit for bringing down scores of responsible credit users is if you consolidate your credit cards onto on card. Let’s say you’re offered an incredible low rate and you take two older cards and combine them onto one new card. This can ding your score if:
1) new debt is unfavorable to your credit
2) if you closed the old accounts (scoring system prefers older established debt)
3) if the new debt amount on the card is over 30% of the credit line amount

Of course, you probably know this, there’s the new car loan slap to your credit score. (I just explained this to a client and they exclaimed “but it’s a used car!” :) )

Again, you may not have had any of these circumstances happen to you to cause your credit score to lower

]]> By: JD Blackwell http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117356 JD Blackwell Sat, 31 Mar 2007 07:16:57 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117356 Ardell, I can see your point if it was a financing for a purchase. My rant stems more from shopping for a second or re-fi that I didn't *have* to have. It's been quite an education over the last few months, one I'd have never have gotten had an LO I'd sent some clients to not demonstrated more ineptitude than I want my clients to have to endure. RE agents are poorly trained in financing (OK, poorly trained) but I'm finding that there as many inadequately trained loan officers out there as well. I've found a few good ones but they aren't the one's who have control over what the wholesale lender comes up with. Now it gets down to having to find someone not only intelligent and ethical but aggressive enough to call BS on an underwriter who's being arbitrary and capricious. I'm not so much shopping rates at this point as not rewarding this kind of behavior by pulling my loan. It wouldn't take long for them to stop pulling that crap if fear of multiple inquiries or losing their deal didn't prevent consumers from pulling out. The whole point is that it shouldn't matter at all how many times my report gets pulled and I shouldn't be penalized for it. To imply that allowing multiple lenders to run my credit is somehow irresponsible is preposterous. What's irresponsible is letting the industry get away with it. Ardell, I can see your point if it was a financing for a purchase. My rant stems more from shopping for a second or re-fi that I didn’t *have* to have. It’s been quite an education over the last few months, one I’d have never have gotten had an LO I’d sent some clients to not demonstrated more ineptitude than I want my clients to have to endure. RE agents are poorly trained in financing (OK, poorly trained) but I’m finding that there as many inadequately trained loan officers out there as well. I’ve found a few good ones but they aren’t the one’s who have control over what the wholesale lender comes up with. Now it gets down to having to find someone not only intelligent and ethical but aggressive enough to call BS on an underwriter who’s being arbitrary and capricious. I’m not so much shopping rates at this point as not rewarding this kind of behavior by pulling my loan. It wouldn’t take long for them to stop pulling that crap if fear of multiple inquiries or losing their deal didn’t prevent consumers from pulling out. The whole point is that it shouldn’t matter at all how many times my report gets pulled and I shouldn’t be penalized for it. To imply that allowing multiple lenders to run my credit is somehow irresponsible is preposterous. What’s irresponsible is letting the industry get away with it.

]]> By: ARDELL http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117327 ARDELL Sat, 31 Mar 2007 06:23:48 +0000 http://raincityguide.com/2007/03/29/5-steps-to-shop-for-mortgage-interest-rates/#comment-117327 JD Blackwell, I hate the whole FICO score system, but there's no reason to shop rates if you haven't found a house yet. As Rhonda has said, rate shopping when you are not locking is useless and a waste of time. Regardless of whether or not you feel it is fair, it is true. And people need to act responsibly and not authorize multiple lenders to rung their credit score. As they say "Buying a home is your most important investment". Running around having everyone pull your credit score is not worth the risk of reducing your score and raising your interest rate as a result. "...getting qualified once before you buy locks you into whatever changes the wholesale lender’s underwriting department comes up with" I don't get that at all. If the one lender who pre-qualifed you plays that game...don't use that lender. There are plenty to choose from. JD Blackwell,

I hate the whole FICO score system, but there’s no reason to shop rates if you haven’t found a house yet. As Rhonda has said, rate shopping when you are not locking is useless and a waste of time.

Regardless of whether or not you feel it is fair, it is true. And people need to act responsibly and not authorize multiple lenders to rung their credit score.

As they say “Buying a home is your most important investment”. Running around having everyone pull your credit score is not worth the risk of reducing your score and raising your interest rate as a result.

“…getting qualified once before you buy locks you into whatever changes the wholesale lender’s underwriting department comes up with”

I don’t get that at all. If the one lender who pre-qualifed you plays that game…don’t use that lender. There are plenty to choose from.

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