How Do You Shop for a Mortgage?
The Peters Company is very fortunate to have outstanding relationships with some of the nation’s most reputable lenders, with no strings attached I might add. One of the benefits of these type relationships is great updates on the market and relevant consumer information. I must take this opportunity to say that we, The Peters Company, do not gain financially from recommending anyone from lenders to inspectors, vendors, etc. We gain only piece of mind when we know that our clients are receiving exceptional service from lenders and vendors we know and trust.
Those of us who have bought a home before know that trying to decide on a mortgage lender can be a stressful process that can leave you wondering whether or not you are getting the best “deal” possible. I find the need to negotiate everything. It drives Lesley crazy, but it’s the truth. I love to negotiate. I always looked at the selection of my mortgage lender to be an opportunity for me to exercise my negotiation skills. I love this article by our friends at Countrywide Home Loans because it really helps you understand what you should be looking for and what is just “smoke and mirrors” sales jargon. Today I feel a little differently about selecting a mortgage lender. I think first and foremost that it’s important to find a lender that you are comfortable with, someone who you like and trust. Much like the real estate buying and selling process, the lending process has its fare share of ups and downs. You want to make sure that the lender you select is there for you and someone that gives you honest, well founded guidance.
From Countrywide Home Loans, courtesy of Scott Meldrum, Robert Gilbreath and Kim Nehiley:
Many, probably most, consumers will talk with more than one mortgage lender when applying for a home loan. They will want to get the “lowest” rate, or the “best” terms, or something along these lines. If consumers are going to be shopping an industry that they are not familiar with, I believe it becomes our job to make sure that they are an “informed consumer”. So let’s look briefly out how to correctly shop for a mortgage.
If It Seems Too Good To Be True, It Probably Is…
Yep, no big surprise there. Most realtors and lenders have heard a client say, “Well, Mortgage Company X said they can do my loan at a 5% interest rate, no money down, and they’ll pay all my closing costs!” Here’s the deal, while some mortgage companies may portfolio very specific types of loans for very specific types of borrowers, allowing them to offer better terms or rates, generally speaking, all lenders get their money from the same places. Thus, all lenders, on most loans, should be closely aligned in terms of interest rate and programs offered. So, if it seems too good to be true, you’d better start finding out where the hook is.
Make Accurate Comparisons…
Lender fees to Lender fees. That’s it. Don’t compare one lender’s bottom line to another lender’s bottom line. Lenders are responsible for quoting estimations on third-party fees, but they DO NOT control them. And some might under-quote those fees to make their bottom line seem smaller. Always and only, lender fees to lender fees. And no matter what a lender says their APR is, get a Good Faith Estimate from them to verify fees.
Rates Change Daily, Sometimes Hourly…
Recognize that mortgages are instruments of investment, like stocks, and therefore change their accompanying interest rate on a daily, sometimes hourly, basis. It is completely pointless to get a quote from Lender A on Tuesday and then get a quote from Lender B on Friday. This would not be an accurate comparison and you’ll just end up driving yourself crazy trying to figure it out! If you’re going get quotes, figure out what lenders you want to talk to, sit down on the phone, and call them one after another, receiving not just an interest rate quote, but a full list of the terms that go with it (discount points, prepayment penalties, etc.). For example, make sure that one comparison isn’t using higher fees to get a lower rate, or conversely, using a higher rate to quote lower fees.
