Posted by & filed under Buying, For Sale or Rent.

mortgage ratesMortgage rates today won’t matter tomorrow.  This is very important to understand so let’s look at it carefully.

Do you know the #1 mistake home buyers make when it comes to a mortgage?  They shop for rates.  This is a colossal mistake and often costs home buyers thousands of dollars.  It can also cost you heartache when you choose a banker who can’t close on time or makes the process a misery.

 

Mortgage Rates – The #1 Mistake

Buying a home in Bergen County takes a good bit of time. Let’s go over this briefly for a conventional purchase:

Your contract is sent to the attorneys as soon as it’s signed.  This begins the Attorney Review process.  No one processes a mortgage then.  Why?  Because it doesn’t make sense.  You won’t have a firm, binding contract on the house until Attorney Review concludes.  Next comes the home inspections.

Attorney Review usually takes 1 week while inspections take longer.  Allow 3 weeks of time to schedule, inspect and conclude inspection issue negotiations.  We are now 1 month past the day the contract was signed.  This is when the mortgage really gets processed.

Assuming you had a pre-approval, some work has already been done.  Consequently it only takes a few more weeks to get the mortgage commitment.  All of this totals 7 weeks.  Because almost all mortgages will not lock a rate until a written commitment is issued, you can’t get your rate for almost 2 months..

Why do mortgage rates today matter when you can’t get yours nearly 2 months?  Yet every buyer stays focused on rates.

Why Do Home Buyers Focus On Interest Rates?

You shop rates because you are taught to do so by powerful forces.  The mortgage indmortgage ratesustry markets itself through interest rates and how easy it is to get a mortgage.  The main emphasis is overwhelmingly on rates.

Reasons Rates Differ

Rates can differ because banks include varying degrees of fees. One bank including all fees will have a higher rate than another eliminating some or all fees.

Additionally, rates fluctuate all day.  As a result, a 10 am quote can differ from one at 3 pm.

It also depends on the loan.  There is more than 1 variety of that 30 year mortgage.  In addition, one banker might calculate your financial profile more accurately than another. The rate you get depends on your financial profile.

You can’t possibly figure out which bank is best for you by only looking at interest rates.

Finding Your Mortgage

Banks loan with help from Fannie Mae, Freddie Mac, FHA or VA usually.  Since they use the same sources, the difference is in the fees they charge.  Look at the APR which is the annual cost of the loan.  Since the APR includes all fees, it’s higher than the mortgage rate.

I don’t believe, however, that it’s only about rates.  It’s also very much about the banker.  While I realize that it’s easy to click your way through a website, it’s often not the best for you.  Why?  Because you might end up with the wrong loan for your needs costing you thousands.

No one can afford to make a mistake with their mortgage.  Imagine the cost of an inefficient bank that closes 1 week late.  How about $3,000 to stay in a hotel and move your things in and out of storage.  If you paid down a $300,000 mortgage by $3,000, you’d reduce your rate by 1/4 point.

Do you need the name of a good banker?  Call or text me at 201-741-8490.  There are several I can recommend who are ethical and come from fine banks.

 

 

 

 

 

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