1. Why should I use a mortgage broker instead of going directly to a mortgage lender?

Quick answer: Selection and Service! It is important to note the difference between a mortgage broker and individual mortgage lenders. We have dozens of lenders to whom we can broker your loan, and from which we can shop for the best rate. If your loan is not approved by one lender, we can shop your loan somewhere else, finding another lender better suited to your particular situation. A mortgage lender has only a few sources of money. If you're turned down, you're turned down.

Unlike most mortgage lenders, we provide very personalized service. Your loan originator handles your account on an individual, one-on-one basis. You have a name and a real person to call, not some out-of-state voice on the phone or email address on a website. Your originator looks out for your best interests, finding you the best possible loan based on your needs and wishes. They handle all the details, making the loan process smooth and easy for you. If you have any challenges in your file, your originator is your advocate. They work exclusively for you, using their expertise to do everything possible to get the loan you want. They do not get paid until and unless your loan closes. On the contrary, agents working at individual lenders are most likely on a salary plus commission, so therefore are paid something whether you close or not. And after all, they work for the lender, not you.

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2. Doesn't it cost more to go to a broker?

No. Whether you go to a mortgage lender or a mortgage broker, the same number of people work on your loan. Whether working for the lender or broker, a loan officer, a loan processor, an underwriter, and their respective managers all need to be paid. They all have desks, use phones and computers and take up office space, regardless of where they work. It costs the lender the same amount to make your loan either way. Also, since lenders want to encourage brokers to bring them loans, and since their costs of doing business through brokers are no more than doing business directly, they cannot afford to discourage their brokers by undercutting their prices.

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3. Why would mortgage lenders allow brokers to bring them loans?

Mortgage lenders offer you the same products at the same price through brokers by offering the loan to the brokers at a wholesale price. Without any out-of-pocket costs, lenders instantly have an unlimited staff of sales people, and no liability for them if they do not produce. Lenders who offer their loans through brokers as well as through their own staff typically do the vast majority of their business through brokers.

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4. I'm in Louisiana, but not near you. Can you still find me a loan?

Yes! We are licensed to handle loans anywhere in the state. In fact, many of our loans are for properties not in the immediate vicinity. We have long-standing relationships with appraisers and other real estate professionals all over Louisiana, allowing us get your loan processed and finalized quickly.

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5. What will an underwriter look for?

Underwriters work for the lender and must decide to approve your loan - or not. They will evaluate your loan application and documentation to see if your criteria meet the minimum guidelines for the specific loan program you are requesting.

In general, they will look at three overall areas:

• Your Income and Employment
  Underwriters will naturally ask, "How will this borrower repay this loan? What is the source of income?" For those employed by someone else, the old way of doing this was to mail a "Verification of Employment" to your employer. The employer would then verify all the pertinent information, such as how long you have worked there, what you currently earn as a base income, how much you make typically in bonuses or commissions, and how likely it is that you will continue to be employed there. Today, we may still do that but we have alternatives too. We can provide your last two years' W-2 statements and tax returns, and your most recent pay stubs covering a minimum of 30 days showing you are still employed. This is called "alternative documentation" and is much faster than waiting for snail mail and your employer, who may or may not be cooperative.
  
  What they are looking for: Sufficient income to cover your proposed total debt load. Do you make enough money to actually pay for all this debt you're taking on after paying for taxes and living expenses, and going out for dinner and a movie once in a while?

• Your Assets
  In the case of a purchase, you obviously must have sufficient cash to actually close the deal. Cash means money in bank accounts, of course, but also any other liquid assets such as stocks, bonds, mutual funds, etc. In addition to enough for the proposed down payment and closing costs, you must also have some reserves. This will vary by lender, but as a conservative rule-of-thumb you should have at least three months' gross income in reserves when the deal is closed. (If you aren’t sure, give us a call. Don’t assume you’re not qualified.) They will also want to document other assets, such as life insurance policies, retirement plans, real estate, businesses owned, automobiles, and personal assets. You are not obligated to disclose or document everything, only those assets you want considered to induce the lender to make the loan.
  
  What they are looking for: Sufficient assets to cover contingencies. If you lost your job tomorrow, would you default on all your debt the next day, or can you carry yourself for a while?

• Your Credit History
  The lender wants to know about your current obligations and the payments you must make each month. They also run your credit report to see how well you have handled your debt in the past. Lenders are coming to realize that how well you have paid your obligations in the past is a better indicator of their safety than any other factors they may consider.
  
  What they are looking for: Is the amount of proposed total debt reasonable for your income and lifestyle? Have you somehow found a way to pay all your obligations in the past no matter what?

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6. What is the best lock-in strategy?

The best lock-in strategy depends on your particular needs and circumstances, as well as market timing.

One point is very important here. All other things being equal, the longer the lock period, the more the loan will cost you. Why? You are obviously asking the lender to assume the risk of a market change. If the lender guarantees you a rate for 15 days, the market will not likely change much in that 15 days and to some degree it is predictable. But a 30-day lock means the lender is stretching his exposure out into a time where rates are less predictable.

So the first rule of thumb is that, unless rates are fairly certain to rise before you can get your loan closed, it is best to wait until you are nearly ready to close and then lock, as you will get the most favorable price.

The market fluctuates daily, however, or even hourly at times. When you see a lender warn that "rates may change without notice," they really mean it. When your loan goes into process, your loan officer needs to be aware of what type of loan you have asked for, how market forces will affect rates in the very near future, and whether your particular program is sensitive to rate changes. (In general, fixed-rate programs fluctuate more than adjustables.)

Typically, if rate increases appear imminent and you need to close escrow on a schedule you don't control (in the case of a purchase, for instance), you should lock-in early. If you have the luxury of waiting out market fluctuations or you feel certain that rates are stable or headed down, then wait. However, your loan officer should review your file and market conditions every morning. If things change, your strategy can change in midstream. There may only be a period of a fraction of an hour to lock you in if the market goes haywire. Stay in touch, and your loan originator will make sure they do, too.

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7. Can I lock-in a rate and then go shop for a home?

Yes, but if you read the answer above you will see that it can be very expensive. It is generally only a good idea if you think rates are going up steeply in the near future. If you want to lock for more than 45 days, you may even have to pay a fee up-front prior to finding your home.

We rarely recommend this strategy, but sometimes it's appropriate.

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