Hi jbspook,

So now to my question (finally!) When I spoke with Countrywide, they wouldn't quote a rate until they pulled our credit. When I go to other lenders will they do the same?

If you must go to individual retail lenders, yes.

Will multiple queries on our credit hurt our scores?

Defnitely can, yes.

If so, how do I get around this and still get an accurate rate quote?

A) you can hire a good broker to originate and shop for you. With a broker you'll only have your scores secured once, and they can then structure and shop among many wholesale funding & resource providers.

B) an "accurate rate quote" is meaningless before your file is sufficiently prepared for a lock at the shortest commitment period (the shorter the period the better your final rate/fee situation... the longer, the higher.)

The rate markets shift daily, often several times interday. Further, I always strongly recommend having your real estate financing reviewed in balance to the rest of your total family financial portfolio, as poor balancing can cost you much much more than a 1/8 or 1/4 difference in rate on an unstructured/unbalanced mortgage.

Ignoring your combined financial balancing is like driving on the freeway while simultaneously pressing the accelerator and the brake. You can never benefit from it at best, and at worst you can actually create danger for yourself... but in most cases people simply waste their good financial resources and delay the time they'll ultimately reach financial freedom and the ability to safely retire.

Don't put yourself in a position of financial regret from lack of holistic planning.

Luck!
Dave Donhoff
Leverage Planner

Dave, thanks for the response.

Let's assume that I won't be using a broker (which is true). As much as I would like to, I can't find anyone I know, or anyone that they know, that has used one. Since that's the case, it seems to me that I'd be safer researching lenders on my own than to put myself in the hands of a stranger whose motives may not be in my best interest.

In regards to your comments regarding financial balancing, I'm a little fuzzy as to your meaning. I'm guessing it has to do with my desire to convert to a conventional loan - I know from your past posts that you aren't always a fan of that. However, in our current situation of having the best house I can imagine (but still below our means) and steady (as can be in this economy) jobs, locking in a fixed rate while they are as low as they currently are makes a lot of sense to me. We are in our early/mid thirties, so the chances of us staying in our home for another 15-20 years is very high.

If you have a differing viewpoint or that's not what you were alluding to, I'd love to hear what you have to say.

As always, thanks for your advice.

Hi jbs,

Since that's the case, it seems to me that I'd be safer researching lenders on my own than to put myself in the hands of a stranger whose motives may not be in my best interest.

What methods will you use to determine if a retail clerk has your best interests in mind? Why would you trust your ability to suss out retail clerks but not wholesale brokers?

Are you aware that retail clerks are fiduciary agents to the BANK (and not to you,) and that ONLY wholesale brokersw have the legal capacity to act in your fiduciary interests (and are actually REQUIRED to do so in many states)?

In regards to your comments regarding financial balancing, I'm a little fuzzy as to your meaning.

You have assets, liabilities, and defensive instruments (insurance) in your family household portfolio. All of these have an effect on everything else, both individually and jointly in concert. Mortgage financing is usually simultaneously the largest liability in a portfolio, the most powerful aspect of leverage (married to your largest working asset,) with the lowest net interest costs, and the most powerful protection to equity. The amount of unleveraged equity entrapped in your real estate (if unbalanced against other asset classes you may have in retirement accounts, etc.) can have a HUGE effect on delays in retirement, or risks-of-loss created. Trying to structure a mortgage while ignoring how it balances out against the other assets and protective instruments in your overall portfolio can be significantly detrimental.

I'm guessing it has to do with my desire to convert to a conventional loan - I know from your past posts that you aren't always a fan of that.

Not at all... I have no problems with conventional financing (that being loans that are sold to Fannie & Freddie.) They are just one of many potential ingredients to a portfolio.

However, in our current situation of having the best house I can imagine (but still below our means) and steady (as can be in this economy) jobs, locking in a fixed rate while they are as low as they currently are makes a lot of sense to me. We are in our early/mid thirties, so the chances of us staying in our home for another 15-20 years is very high.

Sure... in fact, due to the government markets intervention, fixed rate financing not only has no cost premium, it is CHEAPER than virtually all other alternatives. The fixed interest protection is currently basically 'free' relative to alternatives, so no reason not to take the least expensive financing available within your best-fit portfolio structure.

If you have a differing viewpoint or that's not what you were alluding to, I'd love to hear what you have to say. As always, thanks for your advice.

Hopefully this post explains better. Please feel free to ask more questions if you like though.

Cheers,
Dave Donhoff
Leverage Planner

OK Dave, it seems that my shopping for a mortgage is a Catch-22. I either hand it over to a mortgage broker who I don't know that I can trust, or I shop myself with lenders who I *know* I can't trust.

So why do lenders give better rates to mortgage brokers than to lay people? Whoever they're dealing with, their allegiance is still to the lending institution for whom they work.

So for someone like me who honestly knows no one who has used a mortgage broker, how do you suggest I find one and how do I know I can trust him/her? I have to say I'm a bit skeptical - I've been through this with a financial advisor and was less than impressed with his honesty. He was more interested in selling me things that would make him money rather than helping me plan my financial future carefully. And that's one that was actually recommended to me.

Hi jbs,

So why do lenders give better rates to mortgage brokers than to lay people?

A) banks get exponentially more business by attracting brokers than individual borrowers,
B) lay people are less educated and less aware (in general) and more willing to pay whatever the "name brands" charge (same reason people pay twice as much at Nordstrom as for the identical item at WalMart.)

Whoever they're dealing with, their allegiance is still to the lending institution for whom they work.

A mortgage broker's allegience is now defined by law in many states as "fiduciary to the client" (just like an attorney.)

So for someone like me who honestly knows no one who has used a mortgage broker, how do you suggest I find one and how do I know I can trust him/her?

I won't try to paint it as "easy"... but it is the same as you'd do to find any other critical professional who you want ansolute trust with. Consider how you would seek and screen a surgeon for your child's or spouse's discretionary surgery, or similar.

I have to say I'm a bit skeptical - I've been through this with a financial advisor and was less than impressed with his honesty. He was more interested in selling me things that would make him money rather than helping me plan my financial future carefully. And that's one that was actually recommended to me.

There are good & bad in every profession. I wish I could tell you its easy to find the worthy... but its not (in ANY profession.)

The resulting bottom line expectations, however, comes out the same... if you search for quality, interview carefully, and constantly stay aware for character, you are far more likely to end up with a good result.

Chuck it all, and just close your eyes, take the lowest lowball quote liar, or throw a dart at the yellow pages or sunday newspaper adverts, and your odds drop dramatically.

Back to my standard rant;

Choose your provider according to preliminary "quotes,"
And you've simply chosen the most successful Liar.

Choose according to character quality, competitiveness,
honesty, and your personal assessment,
And you will set yourself up for the better Experience AND
the better bottom line pricing!©

Luck,
Dave Donhoff
Leverage Planner

Countrywide is my current lender, too, and they try to get me to refinance weekly. I've got 5.125% currently and they're going to have to drop A LOT for me to bother to pay the fees.

I think that points-wise you could probably do A LOT better. Countrywide seems to have really high fees for an in-house loan...1% is pretty common, and from what I've read on this board people are getting loan offers with zero points. I wouldn't pay more than a point to refi.

Another consideration with Countrywide, and I am not making this up, your credit card companies, especially American Express, may lower your credit limit if you finance with Countrywide. They did it to us. Countrywide happened to offer the best deal when we relocated, and the following month, AmEx lowered our credit limit. Apparently Countrywide has been known to finance less than desirable mortgages, and even though our credit scores are excellent yadda yadda yadda, AmEx has this *policy.* Which of course changes your debt profile if you carry a balance, which we unfortunately have for the last couple of months. Used to be we used only 50% of our credit limit with AmEx, but now it's closer to 80%, which hurts the credit score. We managed to get them to raise our limit again, and our other credit cards did not lower our limit. Right now, as we own 2 homes, having the available credit is important to us in case of extreme emergency. Otherwise we wouldn't care except that it hurts the credit score. Be careful out there!

I have used different mortgage brokers before with great success. I also have gone through banks for mortgages. I really didn't see much of a difference between going with either. I guess I have gone with banks about 3 times and brokers about 3 times. I never had a broker that was trying to sell me all kinds of stuff. They are always very professional and really know what they are doing.

I have used a different unknown broker 4 times in the last 6 years. I go by cheapest rate and total closing cost alone. I have never met my broker in person. Americaninterbanc.com, loansatwholesale.com, or aimloan.com will show you some of the better rates. I usually pit one against the other or against a third to get the best overall package. Watch the fees.