As mortgage rates remain favorable, more consumers are rate savvy and rightfully so. Everybody wants to make sure they’re getting a competitive combination of rate and associated costs in their purchase or refinance loan. Comparing mortgages, doing true apples to apples comparisons can be quite time-consuming and nonetheless labor-intensive.
Typical Way Consumers Shop Mortgages
Most consumers contact 2 to 3 different mortgage lenders, provide a few tidbits of information such as loan amount, occupancy, approximate home value, loan program desired and goals, lender provides accurate rate and cost information based on real time data. Most lenders on any given day are .375% of a rate against the competition (Any more .375% in rate, is a indication the lender is pricing outside of the market- remember all lenders have access to the same rates, same bond market, translation: level playing field).
*Mortgage Tip: There is no law, guideline, or regulation that mandates a lender must provide the lowest interest rate to the consumer. It is up to the consumer to decide ultimately to decide what is in their best interest. This becomes important because consumers feel they are getting the best interest rate and cost financing when in some cases, that may not be not be so. If a lender is dramatically lower than the competition, that’s another sign about the old saying if it’s too good to be true it usually is.
Better Way To Compare Mortgages
Plan on comparing a few different mortgage offers?
During discovery process of deciding which lender has what costs, what rate, focus on the lender offering these strong service oriented characteristics which will ultimately become crucial enuring your loan actually closes.
- Responsiveness-How quickly does each lender respond to you? The more focused you are on interest rate, the more important this becomes especially deciding on when to lock the interest rate knowing the interest rates change multiple times per day, everyday.
- Knowledgeable-Does the loan professional know their guidelines? The screws on mortgage lending standards have been tightened significantly as recently as 2012. Lending guidelines dictate how you can borrow.
- Articulate-Is the lender able to clearly articulate the details? Having a solid understanding of how the loan is being put together, structured and subsequently handled provides for a smoother process and a faster close of escrow and yes, even a better interest rate and payment over time.
- Qualifying-Do you understand how lender is qualifying you? For most people, having an understanding of how the numbers come together is a trust factor in determining which mortgage company they’re going to work with. Knowledge is power. Wouldn’t you want to understand the mechanism of how the loan comes together?
- Rate/Pricing- While the lender is under no obligation to provide you the lowest cost mortgage, they should give you some indication of wanting your future business, so they will make sure the mortgage rate quote offer provided is quite “competitive.”
Why comparing mortgages on “rate” and “cost” alone is not a formula for success.
The internet, television, radio, newspaper, mortgage rates and home loan programs are advertised everywhere. If you receive an offer substantially lower than the competition you otherwise compared against, yet you cannot actually get a hold of anyone, the communication is weak and you keep having get more and more financial documentation, that does not make for a successful experience, let alone provide for any best pricing possibilities. Such instances make the transaction not only frustrating, but also take longer which can actually make the cost rise due to rate lock extension which prolong rate locked as the market continues to move.
By placing a primary emphasis on the service related qualities, it will be easier to make the most informed decision on rate and loan program.
Mortgage Tip: During your information gathering, ask the lender for credible references to validate their claims of their ability to deliver for you. This makes them accountable for actually providing competitive rates and fees as well as service that you can rely on to actually get your loan closed.
If you are thinking about taking out a mortgage and would like some competitive complementary no obligation numbers, we can help. Contact us today!