Monday, September 30, 2013

What Consumers Must Know about the Mortgage Industry

Mortgage Loan Rates are a commodity set by the market.

Mortgage Rates, Economy, Home Prices, and Labor Market are all relative.  Rarely is there a dislocation in the relativity that provides a true benefit.
Ø  When rates are low, the economy is generally struggling, employment is low, and home prices are depressed. 
Ø  When rates are higher or increasing, the economy is strong, employment and wages are high, and home prices are rising.
As a result, consumers always get the relative best rate based on surrounding fundamentals that set the current mortgage rate.

Choosing a mortgage loan based on fit and suitability is the most important decision a consumer can make. 
Every Consumer deserves an interview with a Licensed Mortgage Originator to ensure their needs are met with the most appropriate mortgage product.
Ø  Rates are relative and if someone offers a lower than market rate – something else is compensating for the concession.  Buyer Beware.

True value to a Consumer is a function of Lender Type and Overhead Cost. 
Many consumers see a headline rate and do not look at the details.  Work with a Lender that has the highest certifications thus you get the best access to markets without the additional cost.  Southeast Mortgage is type 1 - Direct with Broker Dealer Capability.

Hierarchy of Mortgage Lender Certifications from Highest to Lowest
1.      Direct with Broker Dealer Capability (This is Southeast Mortgage's Class)
a.      Lowest cost of all
b.      Same as direct with potential cost reductions from trade operations
c.    Best Product Availability and best rates for MLOs and Clients

2.      Direct Fannie, Freddie, and FHA “Ginnie”  Lender
a.      Lower cost due to access to GSEs and no middle men
b.      Relative rates and cost due to proximity to primary market
c.    Good Product Availability and rates for MLOs and Clients

3.      Correspondent
a.      Moderate Cost
b.      Lower cost than a Broker with some rate flexibility based on delivery
c.      Works on behalf of another Direct Lender
d.   Limited Product Availability, higher rates for MLOs and Clients

4.      Broker
a.      Highest cost of all
b.      Middle person between Consumer and a Direct Lender and or Correspondent
c.    Very Limited Product Availability, higher rates for MLOs and Clients

Always select a Licensed Mortgage Loan Originator
Check yours at:
A Registered Mortgage Loan Originator (Employed by State and Federal Banks) has not passed the NMLS test set forth by the government to protect consumers.  All banks employ Registered Mortgage Loan Originators under their federal exemption.   

Would you buy stocks and mutual funds from an unlicensed sales person?  Consumers deserve the protection a Licensed Loan Originator provides.

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