Tomorrow is December, a month dedicated to the great American sport of SHOPPING. Yet even the most confident super-shoppers, the ones who know every angle and tactic to snag the best deals, crumple and hide when it comes to shopping for a mortgage. Either that, or they simply revert to something that gives them the most comfort: shopping for the lowest rate.
I understand that "RATE" is a number, it is measurable (a 5.99% mortgage MUST be better than one that is 6.25%, right?), and therefore rate shopping brings a certain level of comfort. Well, here's the scoop: you can shop till you drop, but comparing mortgage rates by looking at advertisements is like picking your husband from an on line dating service because you like his picture.
Let's face it, you don't have a clue if that good looking guy is compatible with you. That's right, there are many other MORE IMPORTANT things you need figure out BEFORE YOU MARCH DOWN THE AISLE.
Do good looks matter? Absolutely. You ARE staring at the picture, right? This is why lenders advertise low rates, and probably always will. It is why mortgage brokers roll their eyes at "rate shoppers".
So what should you shop for, if not the almighty RATE? As you venture out to refinance or buy a property start by understanding you are shopping for 3 things and yes, one is RATE:
- Rate
- Closing Costs
- Mortgage Broker
BY FAR, the most important thing on this list is MORTGAGE BROKER, not the rate, and not the closing costs. Here's why: What you are really shopping for is an advocate and a solution.
If a mortgage broker plunges into a discussion about rates without asking you about your long and short term goals for the mortgage transaction please, run the other way.
If a mortgage broker starts collecting personal information from you without taking the time to understand exactly how you see a happy ending to the transaction, please, start dialing someone else.
If you sense in any way that the transaction is about his commission instead of your success, mark him off the list.
A mortgage broker who is focused on YOU instead of RATES is going to be your advocate. This means they wiill fight for you (to get the best rates) They will stand by you (presenting you in the best possible light to lenders). And they will keep you informed of the progress so you need not give up a month of your life being stressed to the max about your mortgage.
If you sense you have an advocate, then ASK FOR SOLUTIONS. This is asking your mortgage broker to show how creative she can be in putting together strategies for your achieving your goals. A good mortgage broker will come up with more than one, discuss pros and cons of each with you, and recommend one as the best. These are referred to in the mortgage world as "scenarios" and could best be described as how you are going to get from point A ("this mortgage has to achieve this goal" to point B (an on-time closed loan, an optimum solution, a brilliant strategy, a pleasant experience) And..... not the lowest rate in the mortgage world, but the absolute BEST rate for you.
Now, isn't that better than just saying "I got a helluva rate?" Happy shopping.
P.S. And let us all remember how low rate "teaser" loans, that did NOT take into account the future of borrowers, contributed to the Great Mortgage Meltdown of 2007.
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