Ask the following 5 questions via phone (it eliminates cheating) to gauge the professionalism and knowledge of any mortgage lender.

1. What are mortgage interest rates based on?

The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year T-Bill sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in opposite directions. DO NOT work with a lender who has their eyes on the wrong indexes.

2. What is the next economic report or event that could cause interest rate movement?

A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, call me.

3. When the Federal Reserve Board “changes rates”, what does this mean - and what impact does this have on mortgage interest rates?

The answer may surprise you. When the Fed makes a move, they are changing a rate called the “Fed Funds Rate”. This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets. For more information and explanation, just give us a call.

4. What's happening in the market today, and what do you see in the near future?

If a lender cannot answer how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are talking with someone who is still reading last weeks newspaper, and probably not a professional whom to entrust your home mortgage financing.

5. What is the 4155 and how can a loan officer’s knowledge of it help a client?

If you are a first time buyer and the lender pauses for more than one second…trouble! The 4155 is the underwriting manual for FHA (Federal Housing Administration) mortgages. FHA is the most popular (and powerful) program for first time buyers. FHA offers more flexibility on credit issues, employment problems, qualifying ratios, and down payment source than any loan program. Many lenders don’t like the FHA loan because it is more work for them and they are intimidated by the unusual guidelines.