This Will Make You a Rate Shopping Genius.

By
Mortgage and Lending NMLS 291249

This will Make You a Rate Shopping Genius.

Mortgage Rate Shopping is not Rocket ScienceRate shopping is not rocket science but you should know all the tricks.

Two Rules for Genius Mortgage Rate Shopping

Rule #1  Get it in writing.

Rule #2  Mortgage Rates, Points and Lender Fees are interdependent parts to each rate quote.  When one part is Lowered another part must increase.  A Rate Quote is worthless without all three quoted.

Valuable Mortgage Rate Shopping Tips.

Know your credit score before you begin shopping.  Loan availability and the cost of your loan depend on your credit score.  Most conventional lenders require a minimum 720 mid score, above 80% loan to value, from the three credit repositories (Experian, Equifax and Trans Union) and most FHA and VA lenders require a minimum 620 to 640 mid credit score.  Do not allow any lender to run your credit until you select them as your lender.  Credit reports run by several lenders will lower you credit score. If you do not already know your credit score, there are several Internet companies that will provide free credit scores.  Google search for: "Free Credit Score"

Shop all lenders on the same day and time period.  Mortgage Rates change every day, sometimes several times a day.

Insist that each lender price the exact same Rate.  You pick a rate to shop.  You are looking for lender for the lowest total cost for that rate.   Once you establish the lowest priced lender you can zero in on a rate-point-fee combination that works best for your situation. 

All lenders offer a range of rates and points for each of their loan types. Rate and points are interrelated, lower mortgage rates cost more points... higher rates cost less points.  Create a "Rate Baseline" by asking each lender for the mortgage rate and then compare their points and fees for each rate.

Shop for a specific loan type, because each type is priced differently.  i.e: FHA, VA and Conventional loans, conforming and jumbo have different mortgage rates.  Insist that each lender quote rates for the same loan type.   Some lenders may present you with other options but insist they also provide a quote for the loan you are shopping for to establish a pricing base line.  

Shop each lender for the same mortgage rate lock time period.  You must ask every lender to tell you the lock period for the rate they are quoting.  Mortgage Rates increase incrementally for each longer lock periods.  I suggest shopping rates for a 30-day lock period.  Lock periods can vary but most lenders provide locks for 15, 30 and 45 days.   Some lenders quote their 15 day, least expensive price, which is not available until after the loan is approved.   If you find a lender initially quoting a 15-day rate, it would prudent to eliminate that lender from your short list.

Insist the lender provide a detailed Good Faith Estimate before you complete an application.  You have a right to know to know the price of the loan before you apply.  A few lenders, even some large well-known lenders, falsely claim rates cannot be quoted until they have all your personal information.  This is an absolutely bogus sales technique, these lenders know that borrowers do not want their personal information spread all over town and their credit score lowered by several credit reports AND they know once a borrower provides their personal information they are likely to stop shopping.  Do not apply to any lender before you receive a Good Faith Estimate.

Will the lender allow you to lock your mortgage rate today?  You should be able to lock your rate on the day you submit your signed application as long as the signed application is received by the lender prior to 3:00 PM PT.  Most lenders stop locking loans at 4:00 PM PT although this time is not universal so check with each lender for their lock cutoff. 

          

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Re-Blogged 7 times:

Re-Blogged By Re-Blogged At
  1. Tim and Pam Cash 09/15/2009 12:35 PM
  2. Janice Roosevelt 09/16/2009 01:57 AM
  3. Bob Haywood 09/20/2009 05:33 AM
  4. Cari Anderson 01/14/2010 04:21 AM
  5. Lyn Sims and the Blog Dog 01/14/2010 04:28 AM
  6. John G. Johnston 11/12/2012 11:13 PM
  7. Dean Rosenburg 01/26/2013 09:42 AM
Topic:
Mortgage / Finance
Location:
California San Diego County San Diego
Groups:
Realtors®
Keller Williams 'Rainers
RE/MAX Active Rain Bloggers
Realty Executives
Century 21 Active Rainers
Tags:
san diego
shopping
rate
mortgage

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Rainmaker
813,477
Bill Ladewig
Escondido, CA
Experience Is Your Advantage

Hi Rick, I don't necessarily advocate initially locking a loan.  In fact it cannot be locked until there is an accepted offer. 

The lock discussion here is simply to provide the consumer ammunition to deal with lenders.  The consumer must have an idea how the system works in order to protect themselves. 

The more the consumer knows about the loan process the better it is for honest lenders and more difficult for the not so honest.

Melissa, I need to re-read and possibly rewrite my blog because both you and Rick took it to mean I advocate immediately locking loans.  I don't, the market will generally tell us what to do on that score. 

In your response to Rick you are absolutely correct that "Pull Through" is not the borrower's concern. but WE must be concerned because there are lenders that will blow us off the minute our pull through drops below 70%.

You are correct, Texas pricing is normally about 0.25 Point, points not rate, better than California loans from most lenders who operate in both states.

Thank you both for your comments and discussion.

Sep 11, 2009 06:37 PM #10
Ambassador
2,157,282
Robert Vegas Bob Swetz
Realty ONE Group - Las Vegas, NV
Las Vegas Henderson Homes for Sale

Bill - Very interesting read and thanks for the Late Night!

         www.VegasBuildingsForSale.com

Sep 11, 2009 07:07 PM #12
Rainmaker
813,477
Bill Ladewig
Escondido, CA
Experience Is Your Advantage

Thanks Rick, the discussion was interesting and especially informative to borrowers who are trying to understand our "system".  They were allowed a peak inside.

And, from the discussion it is obvious to me the both you and Melissa are quality professionals.

Sep 11, 2009 07:13 PM #13
Rainmaker
813,477
Bill Ladewig
Escondido, CA
Experience Is Your Advantage

Robert, Wow it is late, a couple more things to do and it is lights out.

Sep 11, 2009 07:17 PM #14
Rainmaker
472,002
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

Bill, I love your guru logo

Sep 12, 2009 12:57 AM #15
Rainer
180,980
Ashley Cox
972.978.3109 - Dallas, TX
Dallas City Center Realtors

Great info, Bill! My Broker has insisted this type of advise and communication with Buyers that are shopping Lenders.

The trouble we see commonly (when Buyers use their own Lenders pre-selected before our chit-chat) is a non-performing LO. Good to see that you're advocating the steps that a Buyer can take to ensure the best process.

Sep 15, 2009 04:38 AM #16
Rainmaker
224,297
Malendaz Coleman
FLAT MLS LISTING SERVICES - Port Charlotte, FL
FLAT FEE MLS LISTING SERVICES - LIST LOW AS $69.00

Good post...very informative, and good tips.    Appreciated!

Sep 15, 2009 08:39 AM #17
Rainer
12,452
Vito Lotta
Premier Mortgage & R. E. - Santee, CA

Perfect timing for this blog. A client just asked me today how to go about shopping her loan. This is what I told her in a nut shell but you worded it much better. I will email her this blog.

Thank you

Sep 15, 2009 10:01 AM #18
Rainmaker
813,477
Bill Ladewig
Escondido, CA
Experience Is Your Advantage

Janice, me too.  :)

Thanks Ashley we can keep everyone hones when we ask the right questions.

Thanks Melendez, I appreciate your comment.

Vito, timing is everything.  Glad it was helpful.

Sep 15, 2009 11:10 AM #19
Ambassador
295,235
Tim and Pam Cash
Crye-Leike (Sango) - Clarksville, TN
Real Estate Professionals - Clarksville TN

Bill, awesome post - chalk full of valuable information.  Just like our clients shop for the right house, so too should they shop for the best rate.  Not doing so could cost them great in the long term.

Sep 15, 2009 12:34 PM #20
Rainer
33,148
Robert Solomon/Broker/Owner
I Net Realty Group, Inc. - Hudson, FL

Very interesting and I saw some points that I was unaware of.

Sep 15, 2009 12:34 PM #21
Rainmaker
813,477
Bill Ladewig
Escondido, CA
Experience Is Your Advantage

Tim and Pam, with good information consumers become armed and dangerous

Robert, glad I was able to shine the light on a couple of points.

Sep 15, 2009 12:41 PM #22
Rainmaker
472,002
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

Bill, this is so good. I'm glad you made it available as a re-post, because, I am going to.

Sep 16, 2009 01:57 AM #23
Rainmaker
639,799
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Hello again Bill.

You are busy posting blogs on AR tonight.

Good information and I'll be passing it along to some buyers I'm working with.

Thanks again,

patricia Aulson/portsmouth nh homes

 

Sep 19, 2009 01:30 PM #24
Ambassador
450,484
Bob Haywood
McGraw Realtors - Owasso, OK
BobHaywood.com

Bill, good info for those of us on the Real Estate side of the deal.  Thank you for the information!

Sep 20, 2009 05:30 AM #25
Rainmaker
813,477
Bill Ladewig
Escondido, CA
Experience Is Your Advantage

Patricia, rust and I never sleep :)

Bob, thanks for your comment.

Sep 20, 2009 05:35 AM #26
Rainmaker
647,047
Team Honeycutt
Allen Tate - Concord, NC

Thanks for the good information.  It's hard to keep all the pieces of the mortgage puzzle together.

 

Oct 16, 2009 08:12 AM #27
Rainer
112,006
Cari Anderson
Danville, CA

Love this info. Potential clients should appreciate your straight-forward advice. I find most have a pre-conceived notion that we lenders are trying to dupe them with rate/fee information. This info encourages them to shop smart and in doing so they can distinguish between the true professionals and the "order takers."

Jan 14, 2010 04:17 AM #28
Rainmaker
981,798
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

This is the best explanation I have seen for the consumer.  Good stuff.  Keep it up.

Jan 26, 2013 01:31 AM #29
Rainmaker
813,477
Bill Ladewig
Escondido, CA
Experience Is Your Advantage

Tim, thanks for your comment.  It is appreciated

Jan 26, 2013 01:38 AM #30
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Bill Ladewig

Experience Is Your Advantage
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