For most people, just thinkingabout the process of acquiring amortgage can be as scary as exploratorysurgery. No one reallywants to go through the mortgage process,but most of us have to, complete with lotsof documentation, appraisals, disclosures,and the dreaded closing process. How canlenders make the experience as simple andpainless as possible? Basically, all lenderswill require the same documentation, andinterest rates vary slightly, if at all, fromone lender to the next. The only way alender can stand out is through productofferings and service quality. Physician-borrowerscan make the process of acquiringa mortgage simple by educating themselveson the following points:
• Mortgage brokers. A mortgagebroker is a middleman between the borrowerand lender. They can be an unnecessaryand expensive additional layer ofbureaucracy inserted into the mortgageprocess. You can often save money bygoing directly to the lender, especially aportfolio lender (ie, one who keeps all themortgages they make instead of sellingthem to other investors). A broker is particularlyunnecessary for the sophisticatedborrower who doesn't need their handheld for every step of the process. Lookfor a lender who offers online or telephonicapplications, which can save youmoney by eliminating fees of a commissionedloan officer.
• Interest rates vs APRs. Don't fall forthe line, "Our rates are lower than everyoneelse's." When comparing one mortgagecompany against another, focus onthe annual percentage rate (APR) calculation.This calculation takes into accountthe rate, fees, points, etc. Many borrowerswill opt for a lower rate, not realizing theyare actually paying more than the interestrate savings in fees and other costs.
• Loan products. A Chevrolet andBMW can both get you to your destination,but that's where the similarity ends.It's the same with mortgage loan products.Only a few lenders offer interest-onlyloans that allow you to change yourrate and loan product without having torefinance and pledged-asset loans, whichallow you to borrow up to 100% of theappraised value of your home. Beforeyou pick a mortgage lender, ask aboutthese special options and their cost. Doesthe lender charge for these options, orcharge extra for jumbo loan sizes?
The difference between one lender andanother might equate to thousands or tensof thousands of dollars over the life of aloan. Shop around—it's your money.
Joseph H. Badal is CEO of
Thornburg Mortgage Home Loans,
Inc, the mortgage lending subsidiary
of Thornburg Mortgage, Inc, a single-
family residential mortgage
lender with $26.4 billion in assets
focused primarily on the jumbo segment of the
mortgage market. He welcomes questions or comments