Housing market crunch. Recession. Economic downturn. These are some scary words often heard while watching the news these days. In times like these, people are often reminded to re-evaluate their own financial situation and examine their financial institution’s stability during an economic downturn.
Enter the question at hand: What’s most important when you are thinking about refinancing? Customer service or interest rate? At first glance, the majority of consumers would believe the obvious answer is the later- interest rates. But is it really?
News regarding decreasing interest rates has caused many consumers to shop around to see where they can find the best deal. However, customer loyalty has become a thing of the past and rate shoppers often overlook the importance of good old-fashioned customer service. When your payment doesn’t auto debit correctly and you get a late notice in the mail, will there be someone there to talk to, or will it be the dreaded automated system with tons of choices, none of which pertain to your situation? Or what if you have a question about the escrow account set up on your mortgage loan, but you can’t remember who handles your loan now since it has been sold three times this year.
Another thought to keep in mind when shopping rates are origination points and discount points. Banks often shoot from the hip and don’t disclose these points when quoting rates in order to entice the customer to come in and begin the origination process, only to later “point” out the extra charges when the loan gets to closing. It is important to ask for a rate quote that includes all points and is based on a specific term. Shorter terms equal lower rates and banks often quote a rate based on a 15-year term as opposed to a 30-year term, which can be misleading. Also ask about the servicing. Will the loan be sold? Often banks sell mortgage loans and the customer ends up paying 3 or 4 companies over the life of the loan. However, some banks or mortgage companies service their mortgage loans, giving the customer the ability to contact the same person who originated their loan for customer service issues.
When it comes down to the nitty-gritty, we all want a good interest rate, regardless of which financial institution we use; however, it is easier to sleep at night knowing your bank isn’t reporting its worse year in history or going under due to numerous foreclosures. The principal is this: if you find a bank you can trust, and it is standing strong during times like these, its nice to know you and your mortgage are being taken care of. (Even if your rate is .125% higher than what the big banking corporation quoted you.)
Natalie W. Bartholomew is a lender with Arvest Bank.
