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Just yesterday the phone rang and an agitated caller demanded to know if the mortgage market is “really that bad.” Her family has been in escrow for over thirty days to purchase their new home and is supposed to close escrow next Tuesday. Her loan officer spent three hours at her home last night trying to justify why her loan had just now been declined after he had submitted to six different lenders. In this market, more than ever before, you need the guidance of a seasoned, informed mortgage professional to be sure your transaction closes.

How can a consumer be sure they are working with someone experienced in dodging the landmines of ever-tightening loan guidelines? Here are a few questions to ask before you give your personal financial information to just anyone who says they can get you a loan.

Are you licensed to write home loans? In California, mortgage brokers are required to be licensed by the state Department of Real Estate. If your provider does not carry a DRE license, ask what governing body oversees their part of the industry.
How long have you been in the business? Anyone who started after 2001 has never seen a constricting market such as we have now

What do you do for continuing education? The loan programs available last month may no longer be available.  Your mortgage professional needs to be a daily student of the market overall, and especially of changing loan guidelines.
What are mortgage interest rates based on? The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. Don't work with a lender who has their eyes on the wrong indicators.

What is happening in the market today and what do you see in the near future? What is the next Economic Report or event that could cause interest rate movement?

If a lender cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are not speaking with a professional. A professional lender will have this at their fingertips and should be able to communicate with you about the “why” of what is happening in the financial markets.

When Bernanke and the Fed "change rates", what does this mean and what impact does this have on mortgage interest rates? The answer may surprise you. When the Fed makes a move, they are changing a rate called the "Fed Funds Rate." This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets.

Tammy Engel is recognized as one of the ten Most Dependable Mortgage Brokers of the West. Reach her at 661/822-REAL for your home loan questions.