Client Questions
Recently, I had a client pose a few questions relative to the mortgage process. They are questions probably many people have, so I thought they were worth repeating.
Where does the money for the loan come from?
The money comes directly from us as we are a mortgage banker (the funds do not come from Fannie or Freddie). At present, Fannie Mae has announced they will not be using the credit line offered by the Fed (they made a few billions dollars in the 1st quarter of this year). The Fed more or less offered the “bail out” to calm the financial markets.
What are the benefits/risks of working with a broker like Mountain Crest Mortgage?
There are two main benefits of going with a banker like us vs. directly to a bank. 1) If the bank closes, borrowers with pending closings are out of luck. For example, borrowers who were scheduled to close with IndyMac now have to re-apply someplace else and reschedule their loans. If this is a purchase transaction, the impact can be disastrous. As a banker we just take you to a different bank if one of them closes; 2) We work on the wholesale side and have the ability to “shop” your loan to multiple investors to find the best overall loan package for you and your clients.
What’s impacting interest rates so much?
Regarding the rates, what is driving them up (or down) is news of inflation. We’re in a volatile market. I’m advising all of my clients to lock early to avoid major swings in interest rates. We have some investors who allow a “float down” so if rates dramatically improve after locking, we can still take advantage of the pricing improvement for our clients. Rates for the past 7 months have been bouncing up and down between 6% and 6.5% with 0 & 0 points - I expect this to continue over the next few months.
Have other questions?
Let me know. I’d be happy to answer them here or privately.