Q: Financing is so confusing. How can you help?
A: What do pork bellies, orange juice, wheat have in common with home mortgages?
They are all commodities. The price of them changes daily.
At one point in my career we had a mortgage company under the Quail Umbrella. We were building about 250 new homes a year. It was extremely important to have the mortgage finance programs well-coordinated to help smooth out operations. I learned a lot. Most is still used today.
Today we work with a number of local lenders like Umpqua Bank, US Bank, Banner Bank, Homestreet Bank and Columbia Credit Union. We feel that it is very important to shop for your financing. When a new home construction builder or realtor single sources loan recommendations I suggest to be cautious.
Most loan officers have some sort of a base salary and then paid on commissions. Their commissions can be tied to the profitability of the loan a client takes (same can be said for management). If the interest rate is a tad above the market or if the mortgage fee is a bit higher then the loan officers typically will make more commissions.
Sometimes loan pricing is set by management. One lenders management team may set their pricing different from another’s. They can lower it to increase sales or increase pricing to increase profitability.
For the two reasons mentioned above, we highly recommend you shop lenders. We at Quail Homes take it a step further. We (as a service to our clients) will take multiple lender quotes and put them on a spreadsheet. This really helps us make good comparisons in order for our clients to make good decisions.
Our last 4 loans we analyzed we saw variances from anywhere of ¼% to 1 ¼% difference in the interest rate and lender fees from $1000 to $6000. Now. That is a whole lot of pork.
Next week I will discuss different types of loans.
I hope this helps and thank you for reading Ask The Builder and making The Columbian of Vancouver, WA a part of your day.
Please submit questions to email@example.com. Jon can be reached direct at 360.907.5800