It’s more important than the rate
Posted by: Greg Fischer Post date: March 4th, 2010When it comes to getting the mortgage for your new home purchase, the MOST important element is NOT the interest rate.
Now don’t get me wrong, a low rate matters. So do reasonable fees and great service. The same three things that all mortgage lenders claim to offer. But if you’re trying to close on the purchase of your new home, the single most critical element to know is “will it close?”
Within my own practice, I have one wholesale lender that day after day offers the lowest conventional rates around. In fact, they market themselves as “The Mortgage Price Leader.” They also offer as smooth a process as anyone these days, and they are among the fastest performing in the business. But we only close a small percentage of our loans with them.
All that lending goodness comes with a price. They are also among the most particular lenders in the industry. If any aspect of the property (like not similar enough comparable properties in the appraisal), or a buyer’s income/assets/credit fall just outside their own guidelines – the loan won’t close.
And they aren’t unique. Many lenders have their own overlays on big guidelines that limit what conditions they will lend. “FHA allows this, but our guidelines require…” has become a fairly common sentiment.
The lowest rate in America doesn’t do you any good if your loan doesn’t close, or close on time. When things go wrong, it usually happens at the last moment, causing a panic for all parties in the transaction, and usually results in you getting not only a loan at a higher rate than you thought, but might also mean losing the house completely.
The key to any successful transaction is communication: early, often, and with complete understanding. Know up front what challenges might come up. Understand that some may not be evident until late in the transaction. Work with your mortgage professional to overcome the problem. If you are communicating with your mortgage professional, and you trust in their integrity and ability to get the job done, you should be given the best rate available on a loan that will CLOSE. And that’s the most important thing.
