What matters most?

le, and no doubt you’re receiving postcard and phone solicitations daily. Before you give in to the shiny promise of a new loan, ask yourself “what matters most”?

If you’re dealing with a call center, it could be that the rep’s commission is what matters most to them. They’ll quote whatever you ask for, without any analysis about what is financially smart. Many people respond to an ad and ask about “the rate”, which we know can vary greatly depending on what you want to do. Prescription before diagnosis is malpractice, in lending even as in medicine. Work with a professional to tease out whether financing makes sense for your family.

Here’s a recent example. This family bought their house in early 2014 with an FHA loan. Today the FHA mortgage insurance premium is lower than it was then, and so are interest rates. But, they have sufficient equity to get out of FHA altogether and not pay mortgage insurance anymore. This could be significant because mortgage insurance payments are not a tax write-off for most of us.

In our analysis of loan options, we ran a closing costs and payment scenario for both plans. Then we ran the loan out seven years to see how each performs over time. Last, we analyzed the tax consequence of each situation. In either case the borrowers are saving several hundred dollars per month, which was important to them. Their other consideration was the hassle of their last loan process. But mostly they were considering what they would owe at the end of seven years, as they intend to sell then.

None of that thoughtful inquiry would have happened had they just asked for “the lowest rate”. We ended up writing the program that at first blush seemed to make the least sense.

Don’t trust your largest debt to a call center or web site. Use your local mortgage advisor’s experience and integrity to be certain your financing makes sense for what matters most to you.

Tammy Engel is your local Mortgage Advisor, and has been working for your best interest since 1990. Contact her at 661/822-7325 for purchase, refinance, and reverse mortgage.