Home buyers who do mortgage shopping can avoid leaving money on the table by finding the right lender to help them through the process.
Whether you’re shopping for items online or in person you usually hit the reviews, check with friends, and scope out the best deal. After all, who wants to buy something that falls apart? Yet when picking a mortgage lender, buyers don’t always think about comparison shopping.
In a survey of recent home buyers, 12% of millennials said they believe their mortgage interest rates were too high. Some buyers may think that when mortgage rates are low, they don’t need to shop for the best offer. But even a quarter of a percent reduction in interest could save a buyer thousands over the life of the loan.
You may think mortgage shopping is about as much fun as prepping for a tax audit. It’s true that comparing home mortgages can get complicated. But you don’t need a finance degree to make an informed decision. Here are some steps to get there.
Ask your Realtor for Lender Recommendations
When looking for a lender, talk with your Realtor about your current situation, they may have a lender that could fit your needs. Otherwise seek out local banks, credit unions or independent lenders. Online reviews are another great option when choosing a mortgage loan provider.
When a Realtor has recommended a lender to you, they have had consistent success with that lender helping their clients. There are laws in place that prevent a lender from giving the agent a kick-back for the referral, so do not think that an agents lender referrals are just another way to get money out of you. It is a genuine relationship and both sides want to see you succeed.
Interview your Mortgage Lender
During a meet and greet, you and the loan officer will usually ask each other questions, almost like a job interview. With the information you provide, the mortgage lender will suggest options or strategies to acquiring to have a successful loan process.
Typically a lender may boast that their rates cannot be beat. In most cases that is true but, it is still strongly encouraged to shop around to find a lender. Some lenders may even offer an incentive if their rates cannot be beat.
A common misconception when getting multiple per-approvals, is that each one will affect your credit score. It will a very small amount but, lenders will see that you are shopping around for better rates. Mortgage Lender credit hits aren’t as bad as applying for credit cards or car loans, those are the hits that will have dramatic affects on your credit score.
Here are some questions that you could ask during the interview process:
Fact finding about the process:
- Would you take me through the process?
- What should I expect?
- What will information will I need to supply?
Compatibility with the loan officer or mortgage banker or broker:
- What’s your communication style? Are you willing to communicate virtually?
- When would I work with you? Are you available in the evenings?
- Will I work with you or a member of your team?
- What do you think of my time frame to get to closing?
- What if any problems do you foresee?
Track record of loan officer and lender:
- How long do loans you process typically take to close?
- How would you expedite the process if there’s a tight time frame?
- About what percentage of loans you work on close on time?
- How many loans have you worked on that haven’t closed or haven’t met deadlines?
- What’s the biggest problem you’ve had with a loan and how did you fix it?
Get and Compare Loan Estimates
After interviewing a mortgage lender and agreeing to let them run your credit, they can give you what is called a Loan Estimate. It outlines the terms of the loan and type of loan that they are offering, then you can take the loan estimate to other lenders to more accurately compare rates.
This process may sound daunting to some but, it is a necessary step. The savings alone over the life time of your loan makes the process completely worth it.