Simply The Best Loans

Many of my mortgage clients routinely ask me about homeowner’s insurance. I always recommend that they get quotes from their current car insurance provider, if possible, because it can mean some premium discounts for multiple policies with one company. While the credit history isn’t affected the same way it is when credit is pulled for a mortgage, credit is pulled by insurance companies as part of their process for determining your insurance premium.

Those with the best credit get the lowest possible premium payments. Borrowers with less-than-steller credit pay much higher premiums for homeowners coverage. If you have less-than-perfect credit and are buying a new home, get quotes from two or three insurance carriers. Ask about discounts if they cover your other insurance needs such as car, life, disability, etc.

Insurance is required by mortgage lenders and, if you have a loss due to something unexpected, you’ll be glad you have it, but do take time to determine the best insurance carrier for your needs, financial picture and credit history. Be sure to have your agent review the policy with you in detail so that you fully understand your coverage. Shop for the best rate available to you. Some carriers include items as part of their basic coverage while others may charge extra for the same item. Make sure that when comparing carriers that you’re comparing “apples to apples” on the coverage.

Loan programs require certain criteria for qualification. In addition to meeting this criteria, the borrower’s particular financial picture such as credit score, the loan amount, the loan-to-value (the percentage of the loan amount as it relates to the sale price or appraised value), the choice of loan program, and/or the type of property can all contribute to changing the cost of the loan.

As previously outlined, lenders quote interest rates with corresponding yield spread premiums. Then the lender has pricing adjustments for all the different variables possible for one loan. Pricing adjustments can be as little as .125 percent of the loan amount up to 5% percent or more of the loan amount. Calculating these pricing adjustments correctly for a specific loan can be one of a loan officers biggest challenges.

Rate sheets vary from lender to lender, program adjustments vary from program to program and everyone’s financial picture is different. With so many variables going into the determination of loan terms, it is virtually impossible for a consumer to compare apples to apples in shopping for a mortgage. It can also be counter-productive for a borrower to attempt to do so.

If a borrower is “shopping” a mortgage with multiple companies s/he risks having too many credit checks, getting confusing or misleading information and possibly having duplication of upfront service fees for appraisals, credit reports, etc. The advantage to working with a professional mortgage broker is to have an experienced professional do the shopping and evaluating for you and then give you an overview of your best options. The broker’s focus is to get the borrower the best possible terms for his/her financial circumstances and needs.