National Association of Mortgage Planners
Planning for a mortgage loan can mean big savingsAn article by James R. De Both
For many people, a home is their most valuable asset and requires the use of mortgage financing. It turns out that the quality of the mortgage loan and many of the early decisions related to the loan can have a substantial impact on the cost of the home. The industry has evolved in a way to ensure that lenders' interests are protected, but in most mortgage transactions there is not a mortgage loan professional present that has pledged to represent the borrower's interests.
In a search for sources of information, assistance, and borrower representation, an industry group was identified that meets this need. George Fox, the Executive Director of The National Association of Mortgage Planners (NAMP), states that, "Designees of the NAMP are contractually bound with a fiduciary responsibility to the borrower. "NAMP acts as the certification authority for the industry designation of Certified MortgagePlanner (CMP). CMP's must be trained and pledge to uphold the NAMP Code of Ethics. NAMP has also standardized "The Borrowers Exclusive Representation Agreement", which details the duties the CMP has to the borrower,for which they are paid a fee.
George Fox has had a great deal of experience in representing the borrower's interest in mortgage transactions and is a proponent of educating the consumer with regard to the lending process. George says, "Most people buy the house, then the mortgage. It should be the other way around. "He suggests that borrowers should take the time and effort to interview prospective mortgage companies. "If you don't like the answers you are getting to your questions, go somewhere else."
Mr. Fox recommends first taking a financial inventory and review your prior two years of earnings. Get a copy of your own credit report.To find out how to obtain a copy of your credit report, consumers can contact the following credit reporting agencies: Equifax (1-800-685-1111), TRW(1-800-682-7654) or Trans Union (1-800 916-8800). Look at your credit worthiness through the eyes of the lender and determine how much money you should borrow.
Investigate any tax consequences that may arise from your planned purchase. Many CMP's are part financial planner and can help you through this process. From this process, the borrower should be able to determine the range for the amount of a loan and then stick with it.
When interviewing a mortgage company, here are some topics to discuss.Ask for a letter stating that the charges outlined in the "good faith estimate", will be the actual charges at closing, except for those charges that will be prorated (i.e. taxes and interest). Look out for extra charges that seem as though they should be part of the loan processing fee. Many lenders have become very creative at naming these charges. Don't be afraid to ask about them and how to avoid them. Find out if they will transfer your file if you decide to close the loan with another mortgage firm. You don't want to be held hostage by your loan information file.It's a good idea for you to hire an appraiser acceptable to a number of mortgage firms with which you might originate a loan. If the appraisals for the lender and not you, another institution may not be able to use it. That means you might have to pay for it again.
Ask to have the "good faith estimate" updated at 14 days, then at 7 days before closing to allow for early detection of unexpected fees. Make sure that you receive a HUD I closing statement 24 hours in advance of settlement, not at closing. This allows time for corrections and keeps you from being pressured in the closing.
Request that the lender provide you with a pre-qualification letter that states you are approved for a mortgage loans based on the potential property having an acceptable value, but without disclosing the amount of the loan for which you are approved. This will protect your ability to negotiate, if a seller should require proof of your pre-qualification.
Ask if you can see the lender's wholesale rate sheet. They may not let you, but it doesn't hurt to ask. You have a legitimate right to know how much you are paying for the loan and how much you are paying for the processing of the loan. Find out how the lender will handle a rate change. If rates go down will you get the better rate? Conversely, will they lock a rate for you. If you lock a rate get a copy of the rate lock. It's good idea to allow an extra 7 days beyond the expected closing date for the expiration date of the lock. That way if there is a snag and closing is delayed, you don't lose your locked rate.
Avoid big purchases once you apply for the loan. They could cause you to become ineligible for a loan. Keep copies of all the information in the lender's file and keep it in a separate file that you control. This can protect you if you end up changing lenders or if the lender's file is lost or accidentally destroyed. Require that the lender keep all information in the file confidential. The appraiser, the seller, and/or agents for either party should not be permitted to know any details contained in the file. This protects you in possible future negotiations that may arise in completing the sale of the property. Also, the appraiser should not know the contract price of the property so that there is no outside influence on the valuation.
George Fox says, "Because the mortgage transaction and the real estate transaction are so intricately related, a CMP® represents the client's interest in the mortgage transaction that can have a beneficial impact upon the entire real estate transaction. " When consumers have done their homework and are armed with good information, only then are they in a position to negotiate a good mortgage loan. For more information about NAMP® or to find a CMP®in your area contact: The National Association of Mortgage Planners®, Inc. 3001 LBJ Freeway Suite 105, Dallas, TX 75234 1-(800) 724-2004.
©1995, 1996 Mortgage Market Information Services, Inc.
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