Rob has really expressed the steps we go through as consumers to try and make sense out of mortgage shopping. It can be confusing and intimidating, but I found for myself that if I did the old pros & cons score card for each loan product it helped to think through the decision.
How to Get the Best Deal on Your Mortgage
So you’ve embarked upon the daunting task of shopping for the best mortgage rate? As a 15-year veteran of the mortgage industry myself, I can be reasonably certain that you, the consumer, will not suffer for lack of choices, information or opinions! In fact, the greater likelihood is that you’ll be overwhelmed with options. Imagine yourself as a tourist in Rome, standing on a busy intersection and asking for directions. Everybody wants to help, but since they’re all responding in foreign languages…at once… it’s going to be impossible for you to understand, let alone jot down, how to get where you want to go. Since I’ve been both a consumer and a lender in this game, I feel I can help get you to your desired destination. The Vatican? Maybe not. But hop on in anyway:
Identify an Advocate
There’s nothing like having someone you trust in your corner. But how do you locate this person? Let me tell you a story about when I got engaged. Suddenly I realized I’d never purchased a diamond before and I had ZERO idea how to do so. This was going to be a large and meaningful investment to me. I was not about to fork over a portion of my life savings and get a cubic zirconia, you know? So, I first bought a book on the subject. Second, I used the internet to hunt down the author. Then, I called him. Turns out he was a really nice guy (albeit a tad surprised...) but he eventually paired me with a diamond merchant in San Francisco, close to where I live. I scheduled a face-to-face with this jeweler, and as luck would have it, we just clicked. We must have talked for two hours that first meeting and he answered every question I could conjure. Yes, he was going to sell me a diamond and I was going to pay him his due profit, but I was able to establish trust, develop rapport, and really settle my whole shopping dilemma. In the end, I got a beautiful diamond and a trusted relationship. I didn’t want to work with anyone else by this point. And you can achieve this with your mortgage too. So Tip #1 is: Identify an advocate. Ask your best friends, colleagues or industry professionals for who THEY would work with. Then approach that person and see if he/she is a good fit for YOU.
Establish the Baseline
Once you have your "key" person, you’ll want to get a pre-approval and know and understand the characteristics of your loan profile. What is your FICO score? What is your debt-to-income (DTI) ratio? These are key components that will play into your eventual loan options and the rates on those options. Remember, your advocate respects you and your need to "shop." He will provide this information if you ask. And when and if you take this data and input it into any online rate engine, your responses will be much closer to factual. This is critical because what you’re doing here is Tip #2: Establish a baseline. Of rates, that is. If you get ten quotes, for example, you should see perhaps six of them in the middle, then two on the high side and another two on the low. I’m a big believer that you DO NOT want to bank on the outliers. You want the middle of the pack, and hopefully this middle reinforces the quote you’ve obtained from your preferred source. If it does, you’re either set from there, or you can use the baseline rate as the jumping off point for further negotiation. You probably won’t be inclined to pursue the higher offers, but recognize too that you may be taking chances on the lower ones. It’s not that they can’t or won’t deliver, it’s just that they’re doing something different to produce that lower rate and you have to learn and appreciate what it is. "Caveat emptor," as they said in Ancient Rome…
Appreciate the Outcome
Finally, our last item, Tip #3: Appreciate the outcome. And when I say "outcome," I mean close of escrow. Real estate transactions are unlike any other. You are not buying songs on iTunes; you are not even buying a car. You are purchasing real property and the transaction is inherently complex. As a consumer myself, I appreciate the importance of competitive rates and pricing --- I seek those out as would you. But, to a degree, the necessity of completing the transaction must be factored into any quote. And to this point, we circle back to the previous two; if you can locate an expert who you trust, who provides competitive pricing and who can get it done, you have hit the most desirable trifecta. If, on the other hand, you take a shortcut to the lowest rate you can find, regardless of the uneasiness you may feel with the person or entity providing it and it later turns out you don’t close? Well, then you don’t really have anything on the other hand do you?
By way of researching online I can tell you’re already on the right track. Keep this going --- you are closer than you think to getting a great rate. As the saying goes, "Rome wasn't built in a day." There’s no reason the process cannot be rewarding, enjoyable and financially beneficial. My industry is full of professionals who’ve built their businesses upholding a model of great rates AND great service AND great results. With today’s powerful search and research tools, you can find us and make it happen. Avanti!
Robert J. Spinosa
Home Loan Professional
BRE: 01297944 NMLS: 22343
1058 Redwood Highway
Mill Valley, CA 94941
877.270.5959 Toll Free