How To Shop for A Mortgage
There are different ways to shop for a never-ending variety of products. You can shop for a new car for instance or a TV.
But, you’d better decide on not just the make and model, but also the different options you’d like to have. That can be the confusing part and make it more difficult to compare prices from one dealership to the next or one store to the next. Buying a car can have its own set of problems beyond just make and model.
Shopping for a mortgagecan also bring its own set of unique circumstances.
What kind of loan should you get?
Should you get a fixed rate?
An adjustable rate mortgage?
What about a hybrid?
If you choose a fixed rate, do you select a 30 year mortgage rate or a 15 year mortgage rate? What about a 20 year? Can you see where this is going? You absolutely must narrow down your loan choices before you can seriously compare one mortgage company with the next.
Let’s tackle the first question, first.
What Kind of mortgage loan should you get?
When shopping for a mortgage it’s vital for you to decide first and foremost the type of loan you’re requiring. After all, you’ll be living with that decision for quite some time. And that can present a challenge.
Too often unwary consumers can pick up the phone and call their bank and say something to the effect of, “I’d like a mortgage quote, please” and instead of getting a firm quote the customer service rep on the other end of the line begins to tell you how great they are and how many different loan programs they have and how many ATMs they claim. Oh, and would you like to open up a checking account?
All of this chatter confuses the issue. To shop for a mortgage means you must decide beforehand the type of loan you require. Only then can you truly compare apples and apples and stay focused on your mission.
What’s the best type of mortgage for you?
An experienced loan officer can help you determine some of your best choices. How long you intend to keep the loan? Do you typically pay a little extra each month on your mortgage payment? Is this a long term acquisition for you? These and other critical factors will play a role in your mortgage choice.
Do you want to pay discount points to get a better rate, for instance? Shopping for a mortgage can be a challenge yet once you decide on a mortgage program you can properly compare mortgage rates from one company to the next.
A good mortgage professional will always ask you a very simple question.
What are your goals and needs?
Now that you’ve decided which loan type is best for you, exactly where do you find your new mortgage?
First, contact someone you already have a relationship with, say your bank. Most banks post their current mortgage rates on their website so it’s easy to find out their latest offerings without speaking with a customer service rep. This should give you a baseline in which to compare rates.
Or you could find a mortgage brokerwho can give you a quote.
A mortgage broker doesn’t issue mortgage loans directly yet represents different mortgage companies and brings borrower and lender together. Mortgage brokers might be higher in rate or they might be lower in rate than other mortgage companies. Yet these organizations have little control over the approval process as the mortgage broker simply collects the data and forwards that information to a pre-selected lender.
The third choice is to contact a mortgage banker.
A mortgage banker does one thing: approve and finance mortgages. They are typically more competitive than a regional or national bank as their focus is solely on making mortgage loans, not credit cards, checking accounts or automobile loans. In addition, since a mortgage banker approves the loan in-house and makes the final decision they have control over the entire loan process.
So how do you compare mortgage rates and how do you shop for a mortgage?
Once you’ve determined the mortgage program and identified the mortgage bankers to call you’re almost there.
Now it’s time to contact your selected mortgage lenders by making calls. And this is important; make those comparison calls around the same time of the day. Why? Many times mortgage rates can change throughout the day.
That means a quote in the morning may no longer be available that afternoon. If one lender is at 4.00% in the morning and another lender is at 4.25% in the afternoon, don’t assume the morning lender is the best. It’s possible that all lenders have increased their rates during the day to reflect current market conditions.
Your Mortgage Company’s Reputation is Important
There are many online sources of user generated reviews, such as Google Places. Check with these services and make sure that your prospective lender’s past customers are happy with their service.
That’s it. That’s how to shop for a mortgage.
- Determine Your Mortgage Program
- Identify Your Selected Lenders
- Compare Rates at the Same Time of Day
- Verify Your Lender is Reputable
By sticking to these three rules, you’ll find your “quest” for the best mortgage will be a success!