the "secret menu" in home lending...

[Kenny Smith]

the "secret menu" in home lending...

If you didn't catch mortgage Mondays a couple weeks ago with David Greene, here's a recap!  Not all lenders are created equal. As a borrower it is really important you know what type of questions you need to ask your lender to ensure you are getting the product, rate, and service that best fits your situation.

Let's dive into some...

1. The Rate Schedule - this is a schedule of all the rates and the points that are attached to get that specific rate. So the question shouldn't be, "what do you have rates at?" The lender could be deceptive and give you the lowest rate, but that also comes with paying for discount points, or higher closing costs. The question should be "what is my break even point?" Meaning, maybe you take a higher right where the lender actually gives you credits back at closing. If you know you're going to refinance down the road, or you're not going to hold onto the property for long, you need to figure this out.

2. Which Rate is "On Sale" - when thinking about permanently buying down your rate, people don't realize that the cost to do so is not proportional. For example, buying down a rate from 7% to 6.5% may cost $5k, but buying it down from 6.5% to 6% may cost $15k. So you need to figure out what the sweet spot is, and that goes the same if you take a higher rate. Those credits you can receive back can vary as well. Figuring out the rate stacks, and "what's on sale" is something every good loan officer should be able to help you with.

3. Closing Dates - when you finally close on your property, you typically have the next month free of any type of mortgage payment. So if you close in July, you likely will not pay your first mortgage payment until September. However, verify with your lender if you close in say early July, you are almost getting two full months without paying a mortgage. Whether you're a flipper, investor, or everyday home buyer, if you are tight on funds, this could really help out.

4. Escrow Waivers - when you close on a house, your lender will typically set you up to pay for your entire PITI each month. Your principal, interest, taxes, and insurance. What a lot of people don't know is you can actually pay your taxes and insurances separately on your own. It can be a savings because lenders typically collect more in reserves than they need to pay your taxes and insurance for you. Maybe a 2-4 month buffer at closing, which can be a significant amount at closing. So the question here is "does this loan product allow for escrow waivers?"

These "secret menu" items could be a game changer for your next loan...