How to shop for a mortgage

How to shop for a mortgage

 

 

     When I speak with prospective clients for the first time, often they inform me of their plans to shop for a mortgage among several lenders.  I've spoken to people who have contacted 10+ lenders before making a call to me.  Others call to compare my quoted rate with what they saw "somewhere online".  Over the years, I've noticed that everyone wants to shop for a mortgage, but no one knows how to shop for a mortgage.

 

     As a lender, you may think I wouldn't want you to shop, but in reality I do.  It's good for both of us.  I can promise you that you're going to get a low rate with low fees, but you're not going to believe me unless you get quoted a higher rate or higher fees elsewhere.  You're not going to appreciate my thorough pre-approval, or the fact that I'll look into several options & discuss your financial goals unless you've spoken with other lenders that just throw a rate at you and try to get you off the phone.  For you, shopping around allows you to learn how different lenders operate, and it certainly can save you money by finding a lender with competitive rates & fees.  Some lenders are extremely overpriced, so shopping around is important.  What is more important, though, is HOW you shop around. 

 

 

Here's some advice that will help you or your clients effectively shop for a mortgage, saving time and money:

 

Get referrals first

Someone you know has recently refinanced or bought a home.  It's a fact.  Check facebook, talk to your Realtor, ask around with friends & family, someone will have a referral of someone they used for a mortgage & were happy with.  This should give you a level of trust to start off with, and working with someone you can trust is the #1 way to get the loan that's best for you at a fair price.  It's a good idea to talk with a referred lender before you call that lender you found online.

 

 

Get pre-approved

Call a lender you were referred to & discuss what you're looking to do.  Make sure you can get a loan before you spend your time shopping around.  When getting pre-approved, be sure to ask the lender what your FICO score is (you'll need it when shopping), and if there are any potential hurdles.  If there are potential hurdles, you'll need to discuss them with each lender you speak with as different lenders have different guidelines that could result in them declining your loan or issuing a higher rate.

 

 

Shop on the same day, at the same time

Rates change daily, and sometimes throughout the day.  It's rare that they'll move a ton in a single day, but in rare occasions rates have moved more than .25% in just a few hours.  If you call lenders on different days to shop, you'll end up comparing apples to orangutans.  Your best bet is to narrow your search to a handful of lenders, and call them all back to back to ensure your numbers are up to date who really is offering the best deal.

 

 

Focus on rates AND fees

Some lenders have very low rates coupled with ridiculously high fees.  Others have higher rates and minimal fees.  It's important to look at the whole picture when determining who is offering the best deal.  To compare apples to apples, be sure to focus only on lender fees & interest rate, while also making sure each lender is offering the same loan program.  Ignore things like escrows and title charges, as these will be the same across the board at every lender (so long as you choose your own title company).

 

 

Don't focus ONLY on rates and fees

Many of the worst lenders in the market offer the lowest rates.    Why is this?  Most lenders are playing in the same pool of money, so lower rates mean less lender profits.  This also means less staff, and less efficient systems to get you through the loan process.  That rock bottom interest rate you locked in means nothing if your loan doesn't get closed.  Service and efficiency are often overlooked, but are nearly as important as rate & fees to getting the right loan.

 

Avoid big banks

Take a second to think about which lenders are advertising non-stop on TV, radio, and through oher media platforms.  Then take another second to think about who's really paying for that advertising.  Did it sink in yet?  Typically, big banks will have higher rates because they've got marketing to pay for, high overhead, and so much jumbled, underpaid staff that your service will suffer while you're paying more. 

 

 

     To effectively shop for a mortgage, you must avoid being a sucker for marketing, you must work with someone you trust, and you must compare apples to apples.  It can be tough to get through all of the numbers and sales-speak without your head spinning, but if you use this advice, you can rest assured you'll get the best loan for you.

 

Shopping for a mortgage?  Give me a call at 484.680.4852 or check out Today's Rates on my website.  We offer great rates, low fees, and the highest level of service in the industry.

 

photo from wikipedia

John Meussner

NMLS# 138061

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