Is this a loaded question?

This can be answered many ways. Let me give you my thoughts.

First and foremost, make sure you end up working with someone competent. This will more than likely be the biggest investment in your life and is far too important to put in the hands of someone who is not capable of advising you properly and troubleshooting the issues. So first, how can you tell if you are working with the right person?

Ask these simple questions, which your lender must get right!

1. What are mortgage interest rates based on? Answer-Mortgage backed securities (MBS), not the 10 year treasury. Although the 10 year treasury can trend in the same direction of MBS, but it can move completely in the opposite direction. Make sure you are working with a lender that has their eyes fixed on the right indicator.

2. What does it mean when Bernanke and the Fed “change rates”, and what impact does it have on mortgage interest rates? Answer-Typically when the Fed moves rates, they adjust the Feds Fund Rate or the Discount Rate. These are SHORT term rates that impact home equity lines, auto lines, credit cards and so on. On the day that they make a move, long term rates (mortgage rates) may even go the other direction. Other times it can be priced into the rates ahead of the move and you will not see much difference on the day of the move.

3. Does the lender have access to live, real time mortgage bond quotes? Answer-You should know the answer to his by reading #1. If your lender is not tied into a real time quote during the day, then how will you be able to make informed decisions when there is an intra-day price change? In today’s volitale environment, we have seen rates priced in the morning, only to change not once but twice during the day. You may be working with someone that is reading yesterday’s news. Would you work with a stockbroker who based your investments on yesterday’s paper?

Yes, finding a rate that works for you is important, but you need someone that will also orchestrate the transaction for you. There is a lot that is involved with purchasing or refinancing a home. Most importantly, work with someone that understands the market, has experience in navigating the real estate/mortgage world, and who you can trust. Trust is so important when you put the biggest investment of your life in the hands of someone. Most of can get a feel if someone has their best interest in mind, not their own. Look for testimonials as well.