In today’s hot housing market where inventories remain at historic lows, prices continue to climb, so affordability is becoming an even bigger factor in all the decisions that need to be made. Moreover, when it comes to affordability buyers tend to oversimplify and focus on two things: price and interest rate. While it’s easy to think “the lower the price and interest rate, the better the financial deal I’m getting.”
Unfortunately, it’s more complicated than that and if buyers just focus on these two items, they could be selling themselves short in terms of maximizing their finances and future. We consulted Jennifer Arnold, Olympia Federal Savings (OlyFed) VP of Residential Lending for insider expertise on what to look for when shopping for a home loan and how you can customize the right financing solution to meet your needs. Below are Jennifer’s five tips to getting the right mortgage:
First, I would recommend asking any lender if the advertised rate is available to everyone? Often lenders will advertise their best rate that’s only available to someone with a perfect credit score. At OlyFed, the rate we advertise is available to everyone; regardless of credit score. In addition, people, not automated computers make underwriting decisions because we believe our local bankers better understand our South Sound market and make sensible decisions.
Many times, there is even more fine print with rates based on factors like down payment amount and home location. Again, OlyFed does not take into consideration these elements when it comes to rate because our values are centered on treating all customers like family.
Second, it’s always good to ask if the lender is going to sell your loan to a third party. For most of us, this is the largest investment we’ll make in our lives. When you purchase your home, you’ll be working with that bank for years to come and we believe selling our loans would be like selling our relationship with you. We assure top quality service by providing it ourselves.
Third, I think it’s important to recognize the volatility of our economy and the ups and downs of interest rates in correlation to market conditions so it’s good to ask if you are going to get the best deal before closing. At OlyFed, we hold your rate at application and don’t require you to pay a fee to “lock” it in, even better than that – if a lower rate comes along, no worries; it’s yours – automatically! You don’t even have to call us to ask.
Fourth, ask about fees. Many lenders charge admin fees, processing fees, underwriting fees and many more. These fees can significantly drive up the cost of your loan. Be sure to compare Annual Percentage Rates (APR), not the interest rates because APR factors in many of these fees.
If you consider that the average lifespan of a mortgage is just seven years, the likelihood you will either sell or refinance before the end of your term is high, so why would you want to pay all those fees upfront, when those are dollars you likely won’t recoup? Most of the fees we charge on the loan are the actual costs and we do not profit from them because we want to keep our loans as affordable as possible.
Lastly, be sure to check the reputation, knowledge and experience of your lender. At OlyFed, we’ve been a part of the Thurston County community for 114 years and we’ve financed a lot of the original homes built in the area. We have many meaningful community connections and can provide you with a wealth of insight and support.