2/17/2020

Applying for a Mortgage: More Than Just Rate Shopping

There's a lot more to a mortgage than just rates. A truly knowledgeable mortgage professional brings a lot more to the process to help you see your mortgage options through a "big picture" lens.

What do you think of when you hear the word “mortgage”? Rates are probably the first thing that comes to mind. In reality, there’s a lot more to a mortgage than just rates.

A competitive rate is an important part of the mortgage equation, of course. However, assuming that the process of buying or refinancing your home is solely about rates can be a costly mistake in the long run.

The purchase of a home is probably the biggest financial commitment most of us will ever make. It’s also part of a larger financial picture that includes your long-term investment and retirement goals, your family obligations (from college-bound children to elderly parents), your current debt load, and your lifestyle.

By not viewing your mortgage options through this “big picture” lens, you run the risk of making a shortsighted or uninformed decision. The right mortgage can be thought of a powerful lever – one that can help you shift financial obligations for long-term benefit, facilitate planning for future expenses such as college tuition, and pave the way to attaining your retirement goals much faster.

How can a mortgage possibly do all that? It all starts with the right mortgage consultant. A truly knowledgeable mortgage professional brings to the process much more than a list of current rates. He or she should also have the expertise to review your overall financial situation, explain the mortgage options that may be right for you, and make objective recommendations to help guide you to the right decision.

This is what is known as a “consultative approach,” which focuses on educating the buyer rather than simply selling you a loan that may or may not be the best for your needs. For example, during an initial meeting, a Team Montani mortgage consultant will ask questions like these:

  • How long are you planning to stay in the home that you’re financing?
  • If you’re refinancing, would extra cash help for renovations or paying off high-interest credit card debt?
  • Do you have children and need to plan for college costs?

A professional mortgage consultant will also take the time to examine your current credit report in detail, then review it with you to look for any discrepancies that should be corrected. A good credit report makes it easier to get a loan at the best possible rate, which means smaller monthly payments. That’s why it’s important to correct any inaccuracies on your credit report.

If your credit situation is less than stellar, your mortgage consultant should also offer realistic suggestions for improvement – budgeting, avoiding additional debt, or utilizing the services of a reputable credit counselor. Be wary of anyone who promises to increase your credit score quickly in exchange for a fee. Only time and deliberate effort will improve your credit.

From your credit status to your retirement goals, some buyers may be taken aback by all the questions and experiences loan officers will ask about. Don’t be put off by queries that can indeed get a little personal – after all, what’s more personal then your finances? Rather than feeling uncomfortable, recognize that the information you provide will ultimately help structure a loan that meets both your immediate and long-term financial needs.

Hopefully, now you can see that the “right” loan extends far beyond simply finding the lowest rate. By working with an experienced lender to understand the nuances of the mortgage process, you’ll be in the best possible position to find the mortgage that makes the most productive use of your money.