Asking the Right Questions Helps Clients Avoid Choosing the Wrong Home Loan

By Chris Lowery and Bill McConnell

With dreams come risks, and the dream of homeownership is no exception.  "There's no question (that) buying or refinancing a home is a huge financial commitment, and it's clearly not for everyone," says Carla Wilson, who was recently sworn in as president of the Charlotte Regional Mortgage Lenders Association (CRMLA).

So far this year, there have been some 900 foreclosures in Charlotte-Mecklenburg, a 150 percent increase over 2003. The reasons for the foreclosures are varied, but many were in starter-home communities and appeared to result from overly aggressive lending practices combined with buyers who were unaware of the risks of obtaining a mortgage.

"Buying a home and getting a mortgage are the single biggest and most important financial decisions most people make in their lives," says Wilson. "They should be decisions approached with the utmost care, yet too often consumers don't protect themselves and get steered down the wrong path." 

To help minimize the risks in choosing a lender and obtaining a mortgage, CRMLA has developed a questionnaire consumers can use.  It is a tool that CRMLA encourages Realtors® to share with their clients. Ask these seven questions, CRMLA recommends, and it's less likely your clients will wind up with the wrong lender or mortgage product.

- How long has your company been in business?
- How long have you been a loan officer?
- Is your fi rm a member of CRMLA and the Mortgage Bankers of the Carolinas?
- Do you offer a written rate-lock confi rmation?
- What fees does your company charge?
- Can I obtain a good-faith estimate?
- May I have a written summary of the benefits and drawbacks of the recommended loan product(s)?

"Asking the right questions on the front-end can save a homeowner thousands of dollars over the term of a loan," says Robert Goodling, CRMLA president elect."We strongly encourage consumers to shop around and fi nd the right lender, the right loan offi cer and the right loan product."

Established in 1954, CRMLA is a nonprofit group composed of more than 75 member firms engaged in or affiliated with mortgage lending or mortgage banking in the Charlotte region.

A trade group dedicated to the mortgage industry, CRMLA helps educate consumers while encouraging ethical practices by its members.

Prospective homebuyers can visit several Web sites for information about mortgages. Realtors® can let their clients know about www.mortgagebankers.org (check out the Home Loan Learning Center), which CRMLA says is one of the best online sites for consumer education. Consumers can check to see if a lender is a CRMLA member at www.crmla.org, and there's more information on mortgages at www.mbac.org (Mortgage Bankers of the Carolinas) and www.nccob.org (N.C. Commissioner of Banks).

"The bottom line is homebuyers need to be good, well-educated consumers, and we in the mortgage industry need to do all we can to ensure our clients understand both the risks and benefits of the loans they are signing," Wilson says.