Once you are satisfied that you
are working with a top-quality professional mortgage advisor, here are the
rules and secrets you must know to “shop” effectively.
First, IF IT SEEMS TOO GOOD TO
BE TRUE, IT PROBABLY IS. But you
didn’t really need us to tell you that did you?
Mortgage money and interest rates all come from the same places and if
something sounds really unbelievable, better ask a few more questions and find
the hook. Is there a prepayment
penalty? If the rate seems incredible,
are there extra fees? What is the length
of the lock-in? If fees are discounted,
is it built into a higher interest rate?
Second, YOU GET WHAT YOU PAY
FOR. If you are looking for the
cheapest deal out there, understand that you are placing a hugely important process
into the hands of the lowest bidder.
Best case; expect very little advice, experience and personal
service. Worst case; expect that you may
not close at all. All too often, you
don’t know until it’s too late that cheapest isn’t BEST. But if you want the cheapest quote – head on
out to the Internet, and we wish you good luck.
Just remember that if you’ve heard any horror stories from family
members, friends or coworkers about missed closing dates, or big surprise
changes at the last minute on interest rate or costs…these are often due to
working with discount or internet lenders who may have a serious lack of
experience. Most importantly, remember
that the cheapest rate on the wrong strategy can cost you thousands more in the
long run. This is the largest financial
transaction most people will make in their lifetime. That being said – we are not the
cheapest. Of course our rates and costs
are very competitive, but we have also invested in the systems and team we need
to ensure the top quality experience that you deserve.
Third, MAKE CORRECT
COMPARISONS. When looking at
estimates, don’t simply look at the bottom line. You absolutely must compare lender fees to
lender fees, as these are the only ones that the lender controls. And make sure lender fees are not “hidden”
down amongst the title or state fees. A lender is responsible for quoting other fees involved
with a mortgage loan, but since they are third party fees – they are often
under-quoted up front by a lender to make their bottom line appear lower,
since they know that many consumers are not educated to NOT simply look at the
bottom line! APR? Easily manipulated as well, and worthless as
a tool of comparison.
Fourth, UNDERSTAND THAT
INTEREST RATES AND CLOSING COSTS GO HAND IN HAND. This means that you can have any interest
rate that you want – but you may pay more in costs if the rate is lower than
the norm. On the other hand, you can pay
discounted fees, reduced fees, or even no fees at all – but understand that
this comes at the expense of a higher interest rate. Either of these balances might be right for
you, or perhaps somewhere in between. It
all depends on what your financial goals are.
A professional lender will be able to offer the best advice and options
in terms of the balance between interest rate and closing costs that correctly
fits your personal goals.
Fifth, UNDERSTAND THAT
INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY. This means that if you are comparing lender
rates and fees – this is a moving target on an hourly basis. For example, if you have two lenders that you just can’t decide
between and want a quote from each – you must get this quote at the exact same
time on the exact same day with the exact same terms or it will not be an
accurate comparison. You also must know
the length of the lock you are looking for since longer rate locks typically
have slightly higher rates.
As
you can imagine, we wouldn’t be encouraging you to shop around if we weren’t
pretty confident that we can give you a great value and serve you the very
best.