As I’m reading some of the broker-bashing going on out there on the Internet right now, as well as paying careful attention to what’s happening in our Oregon Legislature with SB 1090 and other referendums, it occurs to me that the world could really use some definition about what makes one mortgage broker any better than the next. After all, we all have access to the same rates, right?
Here is a copied/pasted four-question list that was originally aired in September of 2006 on CNBC. The author, Barry Habib, has over 20 years of experience as a mortgage broker and economist. He suggests that rather than interviewing prospective brokers about their rates and terms (since we all have access to the same money), interview them based on their true qualifications, knowledge, and dedication to their profession. Here are the four questions he recommends asking your mortgage professional:
1. What are long-term mortgage rates tied to?
The only correct answer to this question is Mortgaged Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.
2. What’s the next economic report or event that has the potential to affect mortgage rates?
Your mortgage broker needs to understand and stay in touch with how the health of the global, American, and local economies affect the rate you will pay for your mortgage.
3. How will the Fed changing the Funds rate affect mortgage rates?
As the FOMC raises the Funds rate, some mortgage rates will be directly impacted, while others may not be affected at all. Directly impacted will be HELOCs (lines of credit) and many ARMs, while longer term fixed rates may actually move down, depending on other economic factors.
4. Do you have access to live, real-time pricing information?
You wouldn’t call up your stockbroker to ask him what Intel or Microsoft were trading for, and wait for him to flip through the Wall Street Journal to get yesterday’s quotes. Why should you expect any less from your mortgage professional?
As you can hopefully see, Barry’s points are focused more closely on how your broker stays in touch with current economic events versus what his morning rate sheet says. I have worked hard (and spent a LOT of money) to keep myself educated and on top of current events – not just for my own sake of knowledge, but also because it helps me identify and plan out key elements of my clients’ lives.
So anyway, part of this post is a defensive rant against anti-broker public sentiment and the rest is genuine information to help my readers identify and work with a truly knowledgable (and ethical) mortgage broker. Please take this information and use it to interview your next broker – be it me, or somebody else.
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