Have you ever had a sick feeling in your stomach after buying a car, or a big screen TV, or a boat, or expensive jewelry? It’s that nagging worry that you’ve bought the wrong model or spent more than you should have.
Buyer’s remorse is common with big ticket purchases, but it’s not as common right after you close a mortgage.
With mortgages, the buyer’s remorse comes later—when you discover the cost of changing your mortgage, or realize that you have no objective source of advice to rely on.
There are numerous ways to weed out inferior mortgages, and (believe me) there are countless inferior mortgages out there. Once you’ve scouted out the best rates, it’s time to start asking questions. Here’s what you’ll want to know:
The Ultimate Mortgage Checklist
To cover all the bases, click this link above, print out the PDF and run through it point-by-point with your mortgage advisor. If they don’t want to answer these questions (or can’t answer them) seek out another mortgage professional.
This checklist covers a lot of mortgage criteria, but it’s not exhaustive and there are exceptions. And keep in mind, it applies mainly to well-qualified borrowers mortgaging their primary residence.
It’s also a living document that will be updated periodically. So if you have other helpful tips on what makes for a great mortgage, let us know and we’ll add them to the list.
Hopefully you find the list useful. Happy mortgaging!
Rob McLister, CMT
Your checklist acts as a great Report Card for brokers. If we were to take any of our normal lenders, we should be able to fully answer 90% to 100% of these types of concerns and have quick access to any missing information. I question the advertising that suggests that I have 30 to 50 lenders “available”- as to whether these agents have the names of 50 lenders or whether they know the product lines of 50 lenders in such depth to have the confidence in answering and helping the consumer. Knowledge always is a powerful tool.
The response I do hear is that these other features are inconsequential since the consumer is solely rate driven. I find that consumers are more likely rate driven when all they know or all they receive is what rates are available and what prepayments that a lender offers.
Another great article Rob! I will be sharing the PDF included of the checklist too
Fantastic tool Rob. I don’t see how anyone can possibly weigh all these factors without professional advice. It is a testament to the value of a good mortgage broker.
For vast majority of ordinary people, the interest rate and term is all that matters.
And that is why the vast majority of ordinary people overpay for their mortgage.
Good points Dr. M.
I suspect less than 5% of brokers advertising access to 40+ lenders know the answers to the key questions about those lenders. Most can get the answers but only a minority will make the effort to comprehensively compare that many.
Most mortgage professionals (in my experience) feel that the core group of products they recommend is “good enough.” And in many cases they are.
But I find (personally) that reviewing all available lenders within 10-15 basis points of the lowest rate often uncovers a better product than the product that is:
a) most obvious initially
b) the one I usually recommend
c) the one with the lowest rate.
But it does take effort, and it does mean you won’t be paid as much–or at all in some cases (if you’re truly recommending the best product for the client).
Cheers…
Nice Job on this.
That attitude does nothing but pad banks profits. How do you think banks get away with IRD charges that are double the competition?
Hi Rob,
Impressive work on an detailed list. In fact, I must confess that I have only skimmed it at this point. I do have some concerns however. Primarily, I think you should have separate lists for lenders and mortgage brokers. Here’s why:
Q1 asks if this is the best rate I can get the client. The truth of the matter is that we can always get clients a better rate if we are willing to give up part of our commission, typically .05% per 20 bps. How do I answer that question honestly without leaving the client feeling that he is getting screwed even though he is not. If you couple that with a question like number 40 which makes it seem that brokers should be paying for appraisal fees a broker could end up getting $0 in net compensation on a $150K condo. A financial institute that is going to make thousands over the course of a mortgage may be able to afford this (and some of them do offer at least partial fee payment) but it is too much of an expectation to put into the minds of mortgage shoppers who are dealing with mortgage brokers. When I do offer to partially or fully pay for an appraisal or legal fee, I want it to be a pleasant surprise, not something that is expected.
With two separate check lists (with a fair amount of overlap) consumers could ask appropriate questions of both financial institutions and mortgage brokers and expect reasonable answers to those questions. The old apples to apples analogy.
Keep up the good work.
I agree! A great checklist, and a great report card for brokers who may want to peruse it every once in awhile to, as you say, make sure their core group of products is as “good enough” as they think it is. I have something similiar to this that I go over with all of my clients to ensure that all the bases are covered. It’s bad business to have them come back once the deal has closed and ask, “Well, why didn’t you tell me I could get this, or do this?” And it’s equally good business when they end up having to move and come in and say, “Thank God you had the foresight to make sure I could port my mortgage!”
Hi JJ,
Thanks for the feedback. As you can probably surmise, this is a consumer-biased list (given that most of our audience are consumers).
Mortgage shoppers are becoming savvier every day. And they have an obligation to use this knowledge, ask hard questions and drive the best possible bargain—irrespective of the originator’s profitability. More and more, a broker’s success will depend on how he/she reacts to this inevitable and coming increase in margin pressure.
“Is the rate you’re quoting me the lowest I can possibly get, given my qualifications and mortgage preferences?”
Right away the broker will have to fib or tell the truth. The truth is most likely it won’t be the lowest rate available for the qualifications and mortgage preferences. True North anyone?