Secrets to Shopping Smart . . .
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.
If a Deal Sounds too Good to be True, it Probably is!
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 are prepayment penalty?
If the rate seems incredible, are there extra hidden fees?
What is the length of the lock-in?
If the fees are discounted, are they built into a higher interest rate?
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 the BEST.
But if you want the cheapest quote -- head 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 rates 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 that most people will make in their lifetime.
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 fees that the lender controls. And make sure the 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 upfront 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.
For more information about how to look at a Good Faith Estimate or a Truth-in-Lending Statement, contact us, and we will provide your with the same information that we provide to our clients.
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 your financial goals. A professional lender will be able to offer the best advice and options to help you find the right combination of interest rate and closing costs that fits your personal goals.
Understand that Interest Rates can Change Daily, even Hourly.
This means that you are comparing lender rates and fees -- this is a moving target on an hourly basis. For example, if you have two lender 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 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.
Be Smart . . . Ask Questions . . . Get Answers!
As you can imagine, we wouldn't be encouraging you to shop around if we weren't pretty confident that we feel that we can give you a great value and serve you the very best.
Please call us with any further questions you may have -- we are ready to work for your best interest!
Let me Help You Save Money!
Todd Bookspan, MBA
Certified Mortgage Planner
602.522.9494 ext 201
Todd@BookspanTeam.com
