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Ask Dr. Don
By Don Taylor, Ph.D., CFA • Bankrate.com
Dear
Dr. Don,
What are the reasons to choose banks
or mortgage companies over one another? It's easy to know a good
bank from a bad one. What are the hallmarks of a good mortgage company?
Divinity Dave
Dear Dave,
The days when our hometown bank or savings and loan held our mortgage
note for 30 years are gone and, for the most part, that's a good
thing. Most lenders now sell their mortgage loans. The pooling of
these loans spreads default risk across a much larger group of investors
and a diverse group of borrowers.
Most lenders also sell the loan servicing, or
the collection of principal and interest payments, to a financial
institution that specializes in servicing mortgage loans. Suddenly,
your mortgage payments are being sent to some place in Oklahoma.
Although this process is frustrating at times, especially if you
are trying to get information on your loan during a change, it allows
the service providers to achieve billing volumes that make for more
efficient operations.
If you can't control who holds the note, or
to whom you write that monthly check, you should choose a lender
by concentrating on the front end of the loan process. Which lender
can provide you with a competitive rate with a minimum of fuss?
Lenders that have an efficient back office staff will make the entire
process a lot less aggravating. They'll work with you to compile
the necessary credit history and documentation specific to your
home. Proactive employees will get you to closing faster. Shop mortgage
rates on our site, then follow it up with calls to two or three
lenders that seem competitive. Ask them to provide you with a list
of references. Call the references to ask how they enjoyed working
with the lender. The hallmarks of a good mortgage company are the
same as a good bank -- customer service.
Consumers trying to decide between using a mortgage
broker or a mortgage banker is a separate question for another column.
Dear Dr. Don,
My car lease is up tomorrow! I want to buy the car, but the
leasing company has refused to negotiate a lower price -- the buyout
is much higher than what the car is now worth. The dealer admits
that they will sell the car at auction for less than the buyout,
but refuses to sell it to me for what they expect to receive at
auction or even for a dollar less than the buyout. What do you suggest
I do?
Leasing Leslie
Dear Leslie,
Look for new wheels. By the time you read this, you'll have
made your decision. Frankly, I'm surprised that the leasing company
isn't trying to recoup their loss by charging you for wear and tear
on the car. Exit strategies for a car lease is something the lessee
should consider before entering into the lease. Trying to finesse
your solution at lease end was problematic.
Editor's note: For more information on preparing
for the end of an automobile lease, check out this
Bankrate.com story on what to do before the lease term
ends.
Bankrate.com writers base their answers on our editorial
content and advice of financial professionals. We make no claims
or representations about the accuracy, timeliness or completeness
of such content, advice or the answers provided to you. Our content,
advice and answers are intended only to assist you with your financial
decisions. However, by its nature such information is broad in scope.
Your financial situation is unique, and our content, advice and
answers may not be appropriate for your situation. Accordingly,
we recommend that you get different opinions and seek the advice
of your accountant and other financial advisers before making any
final decisions or implementing any financial or investment strategy.
-- Posted: July 28, 1999
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