If you've been following us for a while, you know we strive to create transparency in the mortgage process and help consumers get the information they need to make the most informed decisions. We recently took to Reddit to do an "Ask Me Anything" (AMA) to do just that. Have a question that's not on here? Message us on Facebook and we'll be sure to answer!
Q. Is title insurance a scam?
A: Title insurance is like many types of insurance in that its seems like a large upfront cost and you only receive benefit in extreme cases. We advise most buyers to get it because we don't want to be the ones to steer someone away from it in the event they encounter a situation where they need it. With all that said, the title insurance company pays the title insurance agent 85% of the premium in the form of a commission, so that is a good indicator of how few claims they actually end up paying out.
Q: How do you know when it’s worth it to refinance? Is there a certain number I should watch out for that would make it a nobrainer?
A: We typically advise customers that the right time to refinance is when you can save .25% or more without having to pay any closing costs (i.e. get a lender credit to cover your closing costs). For some people there may be other reasons why you'd want to refinance when those elements aren't all there, but that is usually a good proxy.
Q: How do I find out if I’m actually getting the best mortgage rate possible?
A: It's nearly impossible to know if you have the absolute best rate possible. There are more than 20,000 lenders in the US and rates change intraday, so to know that you have the absolute best is unlikely. However, it is possible to know what a very good rate is and what fair closing costs are, which is what we help our customers determine. We shop among a network of lenders and we use a pricing engine to check lenders outside of our network and present this information to the consumer so they know with good precision what a great deal is for their very specific situation - these are not the generic quotes you see on comparison sites. We do this without requiring SSN, we only do a soft credit inquiry, and we don't share your information with any lenders. You get access to this information and get to keep your personal information confidential. You also get access to one of our licensed Home Advisors to help you understand your options and choose what's best for you even if that is with a lender outside our network.
Q: Should I even buy a home at all?
A: Home buying is certainly not for everyone. A home is an asset, and you should compare it to the other investment opportunities. If you think you have better ways to put your money to work, than you should do so. You will want to factor in that if you don't own your home, you're likely paying rent so that can be a drag on your portfolio. Another point is that there are other uses for this asset that you may want to take into consideration.
Q: Do you see another mortgage loan crisis coming anytime soon?
A: There are a lot of factors that go into to this question, so we'll do our best to share information that can help. The mortgage industry is on much more stable footing than it was before the last crisis. The agencies, Fannie Mae and Freddie Mac have tightened their underwriting guidelines and there have been a number of regulations put in place to protect consumers from the blatant fraud and predatory lending that was taking place. So in that sense, we're in a much better place. Property values have been rising for a very long time, though, and we're in the midst of a 10 year bull market, so there is reason to believe that the economy and the housing market will likely soften. I think like any investment, you want to think about the pros and cons and look at the long term viability of buying a home and factor in specific variables like what market you're buying.