Shopping for a mortgage is like shopping for a car (KINDA)

Shopping for a mortgage loan is like shopping for a car (Kinda)

Have you ever decided you could afford a new car based on the advertised price only to actually pay much more after being “sold” on the amenities?  Something similar happens in the mortgage rate market when banks/lenders advertise rates but when you actually go to apply they add on extra fees/points for risks.

The best interest rates go to those with the best credit profiles with the lowest loan to value (LTV) ratios on the least risky property type (a single family residence).  Additionally the shorter the term for the loan the cheaper the money so a 15 year loan or an Adjustable Rate Mortgage ARM with a 5 or 7 year term is cheaper than a 30 year loan.  In other words, those that fit into the PERFECT BOX get the very best rate as the risk to the bank is less but when the risk gets greater the price goes up – sometimes way up!

Few of us fit into the PERFECT BOX – but don’t despair as this is where a Mortgage Loan Originator (ME) earns their keep.

Banks/Lenders now have Loan Pricing Adjusters that either add or subtract to a rate depending on risk.  An example would be if a lender is financing a home valued at $500,000 and a loan of $200,000 the LTV is only 40% and a par price is offered.  If however the home is valued at $500,000 but the loan amount is $400,000 (80% LTV) it might carry a cost of 1.00% extra in points.  A credit score of 780 may get a .25% discount on the loan points because it's excellent and a 630 score may get charged 1.5% in additional points because it's lower and therefore riskier.  Additionally a condo has more risk (less appeal to the market) than a single family and the lender may add an additional .75% of a point to a transaction.  A point is 1% so on a $400,000 loan 1 points would = $4,000.

The matrix of these Loan Pricing Adjusters is complicated with many layers. It's for the lenders to decipher but for you as a consumer to be aware of as it is you who has to go through the interview and approval process which can be daunting.

I'd be happy to discuss what interest rates would look like for you - call me 707-322-9481. Be ready for a fact finding discussion as we go through the maze to answer the question “What’s the rate today?”.   

Here’s what my past clients are saying:

In 2013, my husband and I were looking to refinance our home loan and had just been through a discouraging experience wherein we were promised a great rate, only to stop receiving any return phone calls from the mortgage loan specialist we had worked with.  Eventually, we received a form letter stating that we were not eligible for the loan.

We decided to try refinancing again, this time with Brenda McCracken.  From the beginning, Brenda acted in a manner that was extremely pleasant and friendly as well as professional.  She was able to answer all my questions clearly and she really walked us through the process.  She got the paperwork moving immediately and always answered my phone calls within less than 12 hours, usually calling me back immediately.   This has helped us tremendously as we were able to lock down a very good rate and our new, lower mortgage payments are saving us $900 per month.  I recommend Brenda McCracken in the highest possible terms.

Amy Lager-Smith/Novato

Brenda McCracken is the reason that my husband and I were able to get a mortgage and are now happily living in our new home.

We'd lived outside the United States for more than 20 years and, even though we had excellent credit elsewhere, we had not maintained our US credit. Until we worked with Brenda, we had been unable to convince any US mortgage lender to even consider our situation.

Then, with her years of experience, industry knowledge and professional connections,  Brenda made it happen!

JoAnn McEachin/Petaluma