This portion of the training does not happen online; it's done one-to-one. By reviewing each line item on several Good Faith Estimates (GFE) we are able to help clients fully understand the fees and options available to them.

 

One option that is promoted by some of the national internet based mortgage companies is fixed fee or no fee loans. Any mortgage can be done fixed fee or no fee, the rate is simply increased to cover the costs. Allow us to explain.

 

There are hard costs associated with doing mortgages. There are third party fees like appraisals, flood certification, escrow or closing fees, title insurance, and the like. And there are hard-cost lender fees for processing, underwriting, final document preparation, administration, wire transfers and the like. All lenders on the planet have overhead costs and hard costs tied to each loan. Rates on any given day have costs associated with them that are either positive or negative. In other words, if a client wants a lower rate than that day's "par" price, he or she can buy the rate down with points. Some clients do this to earn bragging rights at backyard BBQs. What they don't tell their friends is what that low rate cost them up-front. If that same client wanted to use rebate to cover some or all the closing costs, they can choose to pay a slightly higher rate and receive credit from the lender toward closing costs. This is how any lender can offer fixed rate or no rate loans. The real issue is, what's best for you? How much does it raise the rate to cover the fees? How much does that raise the payment? How long will you have stay in the loan to "break even" on covering the fees with the higher rate? These are the kind of options that can only be learned one-to-one based on that day's rates.

 

Other options to review at this meeting are specific programs to meet your specific needs. Should we look at a 5/1 ARM, 3/1 ARM, or will the 30 year fixed best suite you? How will it affect your rate and payments if we opt for Interest Only for the first few years? Will the lower payment offered by the HELOC help you sleep better, or will the stability of the fixed second fit you best? Should we amortize a second mortgage over 15 years, 20 years or will a 30/15 better help you reach your goals? You don't need to become a specialist in lending but you will feel better about the solution you select if you fully understand your options. This is what we do best.

 

How much learning do you need to do before we get face-to-face? Again, it's up to you. Some clients prefer to come in with very little background work and rely on us to help them understand their options and provide them with clear, straight-forward choices. Others feel like more education before we meet helps them feel comfortable asking all the right questions. Our goal in building this site was to better meet the needs of this second group.

 

If you feel that it's time to move forward with getting ready to buy a home, send us an e-mail or call us to schedule the one-to-one training our clients like to call "Fees & Options 101".