Frequently Asked Questions
WHY DID MY REALTOR, FINANCIAL PLANNER, CPA REFER ME TO YOU?
A high quality Realtor or other professional knows that the key to a successful transaction means
TEAMWORK with a professional mortgage banker. Any experienced Realtor could tell you horror
stories about times when a client made a poor choice of mortgage company, and ended up with big
surprises at the closing table, or worse, no closing taking place at all! A good Realtor will form
relationships with trusted individuals who have proven themselves time and time again, so that they
know you will be given the excellent service that you deserve. It is important to know that your Realtor
is NOT given any compensation or "kickbacks" for referring you to a mortgage banker. As mortgage
professionals, we desire more referrals, both from you and your Realtor, so consider the extra
motivation this provides for us to take great care with your satisfaction! Some of our business affiliates
in the Realtor or Financial Planning fields are employed by us and I mentor them on completing the
loan process for their clients in the best and most efficient manner. If your Realtor or Financial
Planner assisted you in completing a loan application and/or gave you advice on loan programs you
can be assured that they have been coached by a proven mortgage professional and only then may
they be compensated for their assistance as an employee of my firm.
WHY SHOULD I USE A REALTOR?
First and foremost, because you need an experienced professional working on your behalf. The
Realtors commission is not paid by the buyer, but by the seller of the home being purchased, and it is
in each party's best interest to have professional representation. As a seller, profits are generally
maximized by having an experienced Realtor market and sell your home, rather than deal with the
headaches of trying to do it all on your own. I strongly suggest you to get a Realtor that is not
affiliated with the seller or the seller's Realtor to ensure you get the best service possible and are not
tied into a higher price for that house you want.
WHY AND HOW DO INTEREST RATES CHANGE?
Many people are surprised to learn that rates change on a daily and sometimes hourly basis. Interest
rates fluctuate in response to changes in the financial markets. The bond market is generally a good
indicator of the general trend of interest rates. Mortgage Backed Securities is what the industry uses to
track fluctuating mortgage rates. Some rates change less frequently due to their market. We can
provide you with as much info on current rates and where rates are destined to go in the future once
we get to meet in person to go over your options.
WHAT HAPPENS ONCE I AM PRE-APPROVED?
You are ready to buy a home! Remember that it is very important to inform us of any changes in the
financial information that was provided at the time of approval, as it may make a change in the
amount or type of loan that you can qualify for. This means that you should avoid making any new
purchases of large items like cars and furniture until after we close your loan.
WHEN SHOULD I CONSIDER REFINANCING?
The old rule of thumb was when you can lower your interest rate by at least 1%, but this is no longer
the case. Many different individual factors need to be analyzed to determine if refinancing is right for
you, such as the length of time you intend to stay in your home, or the type of loan you currently hold.
We are always happy to provide a recommendation to you for your particular circumstances.
WHAT IS AN ORIGINATION FEE?
Typically, it is 1% of your loan amount, and works exactly like a discount point. You can avoid all or
part of this fee by paying a higher interest rate. Predatory Lenders typically charge more than 2%, so
be careful if you choose to do business with someone other than us.
WHAT IS TITLE INSURANCE?
It is a policy provided by the title company guaranteeing the accuracy of the title work done on your
home at the time of purchase. As a buyer, you are required to purchase a lenders policy of title
insurance as part of your standard closing costs, which only protects the mortgage company. You may
also choose to purchase an owners policy, which would protect you against any loss in the event of
any legal issues relating to the title of your home.
WHAT IS MORTGAGE INSURANCE?
This is generally required in one form or another when the down payment is less than 20%, and
protects the lender in the event of loan default. The lower the down payment, the higher the risk for
the lender, and thus the higher the monthly premium. Depending on your particulars, there are ways
in which mortgage insurance can sometimes be avoided at purchase, or dropped altogether at some
point in the future. The Congress has on its current agenda (2006) a bill that will make Mortgage
Insurance tax deductible.
WHY SHOULD I USE YOU INSTEAD OF ONE OF THE ADS I SEE ON TV OR IN THE PAPER?
Buying a home or refinancing is one of the largest financial decisions you will make in your life - and
unfortunately, this means you may experience some stress as you approach these decisions. As in
many other industries, the mortgage industry has more than its share of unethical individuals that are
out to make a buck, but do not have your best interest at heart, and may try to take advantage of your
stress at this point in your life. For example, I have heard numerous stories about people being called
and told that they need to "quickly come into the office and get all the paperwork signed, rates are
changing". Not true - you should never be made to feel panicked or pressured about making this size
of a financial decision. If you are truly ready, a rate can be locked right over the phone.
Advertisements in the newspaper or online are also rampant with misinformation, designed only to get
phones ringing. Rates change daily, sometimes hourly, so just by virtue of being in print somewhere,
they are almost sure to be outdated. The trick is, lenders can put anything out there, and if it gets the
phone to ring, that is all they need. The following conversation ensues….."Hello, I'm calling about
the 7% rate I saw that you advertised in Saturday's newspaper?" "Well, it's wonderful that you called!
Rates did change a bit this morning, and are now at 7.5%, but let's talk a little more about you……"
Lenders will also frequently promote "free appraisals" or "discounted origination fees". This is great,
but BE AWARE that if you are not paying for it one place, you are paying for it somewhere else.
Interest rates and closing costs go hand in hand, so it is important to look at the overall loan package,
not just one individual item that seems discounted. We all work off the same financial markets with
essentially the same profit margins. Do we make money when we do your loan? Certainly, just like you
get paid for working at your job. What we seek for you is the best balance between a great interest rate
and reasonable closing costs.
Online lending is also particularly scary - ANYONE can throw up a mortgage website, and be aware
that the person behind that great rate you are seeing online might be some guy working out of his
basement in Florida who has been in the business for 6 months. For example, closing costs vary
significantly state to state - out of state lenders frequently misquote fees, as they are not aware of
local and state requirements. I have personally been involved in bailing out several individuals who
were lured in by an offer that seemed too good to be true, but then the lender could not come
through at the closing. I have been in mortgage banking for over five years, and I would not trust my
own loan to an online, unknown lender. Are you really willing to take this risk?
Have more questions? Use the Contact Us form to ask your questions.
Felt Financial Group 2006 All Rights Reserved
A high quality Realtor or other professional knows that the key to a successful transaction means
TEAMWORK with a professional mortgage banker. Any experienced Realtor could tell you horror
stories about times when a client made a poor choice of mortgage company, and ended up with big
surprises at the closing table, or worse, no closing taking place at all! A good Realtor will form
relationships with trusted individuals who have proven themselves time and time again, so that they
know you will be given the excellent service that you deserve. It is important to know that your Realtor
is NOT given any compensation or "kickbacks" for referring you to a mortgage banker. As mortgage
professionals, we desire more referrals, both from you and your Realtor, so consider the extra
motivation this provides for us to take great care with your satisfaction! Some of our business affiliates
in the Realtor or Financial Planning fields are employed by us and I mentor them on completing the
loan process for their clients in the best and most efficient manner. If your Realtor or Financial
Planner assisted you in completing a loan application and/or gave you advice on loan programs you
can be assured that they have been coached by a proven mortgage professional and only then may
they be compensated for their assistance as an employee of my firm.
WHY SHOULD I USE A REALTOR?
First and foremost, because you need an experienced professional working on your behalf. The
Realtors commission is not paid by the buyer, but by the seller of the home being purchased, and it is
in each party's best interest to have professional representation. As a seller, profits are generally
maximized by having an experienced Realtor market and sell your home, rather than deal with the
headaches of trying to do it all on your own. I strongly suggest you to get a Realtor that is not
affiliated with the seller or the seller's Realtor to ensure you get the best service possible and are not
tied into a higher price for that house you want.
WHY AND HOW DO INTEREST RATES CHANGE?
Many people are surprised to learn that rates change on a daily and sometimes hourly basis. Interest
rates fluctuate in response to changes in the financial markets. The bond market is generally a good
indicator of the general trend of interest rates. Mortgage Backed Securities is what the industry uses to
track fluctuating mortgage rates. Some rates change less frequently due to their market. We can
provide you with as much info on current rates and where rates are destined to go in the future once
we get to meet in person to go over your options.
WHAT HAPPENS ONCE I AM PRE-APPROVED?
You are ready to buy a home! Remember that it is very important to inform us of any changes in the
financial information that was provided at the time of approval, as it may make a change in the
amount or type of loan that you can qualify for. This means that you should avoid making any new
purchases of large items like cars and furniture until after we close your loan.
WHEN SHOULD I CONSIDER REFINANCING?
The old rule of thumb was when you can lower your interest rate by at least 1%, but this is no longer
the case. Many different individual factors need to be analyzed to determine if refinancing is right for
you, such as the length of time you intend to stay in your home, or the type of loan you currently hold.
We are always happy to provide a recommendation to you for your particular circumstances.
WHAT IS AN ORIGINATION FEE?
Typically, it is 1% of your loan amount, and works exactly like a discount point. You can avoid all or
part of this fee by paying a higher interest rate. Predatory Lenders typically charge more than 2%, so
be careful if you choose to do business with someone other than us.
WHAT IS TITLE INSURANCE?
It is a policy provided by the title company guaranteeing the accuracy of the title work done on your
home at the time of purchase. As a buyer, you are required to purchase a lenders policy of title
insurance as part of your standard closing costs, which only protects the mortgage company. You may
also choose to purchase an owners policy, which would protect you against any loss in the event of
any legal issues relating to the title of your home.
WHAT IS MORTGAGE INSURANCE?
This is generally required in one form or another when the down payment is less than 20%, and
protects the lender in the event of loan default. The lower the down payment, the higher the risk for
the lender, and thus the higher the monthly premium. Depending on your particulars, there are ways
in which mortgage insurance can sometimes be avoided at purchase, or dropped altogether at some
point in the future. The Congress has on its current agenda (2006) a bill that will make Mortgage
Insurance tax deductible.
WHY SHOULD I USE YOU INSTEAD OF ONE OF THE ADS I SEE ON TV OR IN THE PAPER?
Buying a home or refinancing is one of the largest financial decisions you will make in your life - and
unfortunately, this means you may experience some stress as you approach these decisions. As in
many other industries, the mortgage industry has more than its share of unethical individuals that are
out to make a buck, but do not have your best interest at heart, and may try to take advantage of your
stress at this point in your life. For example, I have heard numerous stories about people being called
and told that they need to "quickly come into the office and get all the paperwork signed, rates are
changing". Not true - you should never be made to feel panicked or pressured about making this size
of a financial decision. If you are truly ready, a rate can be locked right over the phone.
Advertisements in the newspaper or online are also rampant with misinformation, designed only to get
phones ringing. Rates change daily, sometimes hourly, so just by virtue of being in print somewhere,
they are almost sure to be outdated. The trick is, lenders can put anything out there, and if it gets the
phone to ring, that is all they need. The following conversation ensues….."Hello, I'm calling about
the 7% rate I saw that you advertised in Saturday's newspaper?" "Well, it's wonderful that you called!
Rates did change a bit this morning, and are now at 7.5%, but let's talk a little more about you……"
Lenders will also frequently promote "free appraisals" or "discounted origination fees". This is great,
but BE AWARE that if you are not paying for it one place, you are paying for it somewhere else.
Interest rates and closing costs go hand in hand, so it is important to look at the overall loan package,
not just one individual item that seems discounted. We all work off the same financial markets with
essentially the same profit margins. Do we make money when we do your loan? Certainly, just like you
get paid for working at your job. What we seek for you is the best balance between a great interest rate
and reasonable closing costs.
Online lending is also particularly scary - ANYONE can throw up a mortgage website, and be aware
that the person behind that great rate you are seeing online might be some guy working out of his
basement in Florida who has been in the business for 6 months. For example, closing costs vary
significantly state to state - out of state lenders frequently misquote fees, as they are not aware of
local and state requirements. I have personally been involved in bailing out several individuals who
were lured in by an offer that seemed too good to be true, but then the lender could not come
through at the closing. I have been in mortgage banking for over five years, and I would not trust my
own loan to an online, unknown lender. Are you really willing to take this risk?
Have more questions? Use the Contact Us form to ask your questions.
Felt Financial Group 2006 All Rights Reserved
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