Help Borrowers Find the Best Mortgage Rate! Yes, please! The recent move away from the low mortgage rates that have been in place for years is a massive shift in the realities of buying a home! Like it or not (and NOBODY likes it), buyers will have to deal with those rates in the near future. Who knows, they might be here for a long, long time. But there are ways to soften the sharp edges of high-interest rates. Brokers and lenders need to show buyers How To Shop For Mortgage Rates.
Take a look at what Freddie Mac says about Shopping for Mortgage Rates: “when it comes to mortgages, shopping around for a better rate could save you hundreds or thousands of dollars. Our research indicates that borrowers could save an average of $1,500 over the life of the loan by getting one additional rate quote and an average of about $3,000 for five quotes. Yet nearly half of consumers don't shop for better rates before taking out a mortgage to buy or refinance a home. Worse, many consumers do not seem to realize that the rates offered by lending institutions vary widely. Why are consumers leaving money on the table? Answering that question won Richard Thaler a Nobel Prize in economics. His research into seemingly irrational economic behaviors finds that, in general, consumers search too little, get confused while evaluating complex alternatives, and are slow to switch from past choices, even if it costs them. These types of behavior apply to more complex tasks such as taking out a mortgage and can lead to borrowers relying solely on their existing banking relationship or a single referral from a real estate agent or a friend.”
Help Borrowers Find the Best Mortgage Rate! The mortgage market is volatile, and the last two years have seen nearly unbelievable rates, methods, terms, and availability changes. The Covid 19 Pandemic radically altered the ways we shop for a house, the way we tour a house
Many mortgage lenders and brokers are turning to Business Process Outsourcing to Outsource Mortgage processing, that is, Mortgage Loan Processing. This allows them to cut overhead, giving them more flexibility in loan pricing. But when it comes to saving money, smart home buyers know to Shop for Mortgages. Let's look at the process with that in mind.
Key Takeaways For How To Shop For A Mortgage
Ask any savvy shopper about anything, and they'll tell you three is the bare minimum. More is better, and at least five is all the better. And they all need to have and use the same information you supplied, things like income, debt, savings, liens, and anything that will affect your credit score. You'll need to check their charges as well as the rate they'll quote you because it all costs money, and high mortgage closing costs can make a difference in what will ultimately be your mortgage costs.
Help Borrowers Find the Best Mortgage Rate? One thing to look for is a lender that uses eClosing. Using a more "now-tech" way of keeping all the mortgage documents in digital form is a money-saver, and the lender can pass those savings on to you. This means less paperwork and a quicker move to closing, things lenders love.
What's the best rate? Obviously, the best rate is the lowest. But the best (least expensive) mortgage may not be the one with the best rate. How? Because you're not only paying for the mortgage, but you're also paying for all of the other elements of securing a mortgage. Closing costs, assessments, and even hidden fees may surprise you. So you need to know the total costs for the mortgage you choose. Lenders use the same criteria when looking at what their competition offers.
Checklist To Shop For A Mortgage In Seven Steps
Help Borrowers Find the Best Mortgage Rate! Here's your checklist:
- Check credit scores and credit reports. Look for errors, as they are more common than you think
- Know the types of mortgages. Conventional loans (backed by Fannie Mae or Freddie Mac), government-insured loans such as the FHA loan, VA loan, and USDA mortgage
- Understand repayment terms. Fixed-rate and adjustable-rate loans give buyers options in the interest rate they'll pay over a 15- or 30-year loan term
- Get documents together. Verify financial information like income, employment, debt obligations, and tax returns
- Shop around. Get quotes from at least 3-5 or more lenders and your existing lender, bank, credit union, or mortgage broker
- Know the mortgage rates. Staying current on today's rates can help you get the best deal on your loan
- Compare then negotiate rates. Yes, you can get a deal on rates and fees, but only if you ask
The benefits of shopping for a mortgage are plentiful, as we've outlined above. Save money, save money, save money. And any way you slice it, that's a good thing. Remember that five quotes can save you, on average, $3,100 over the life of the loan. In today's mortgage world, it's probably an even higher amount.
But any predictions are risky in the whiplash that has been the last two years of the real estate universe. And suspicious. So beware of the "know-it all" peddling access to mortgages. If they don't acknowledge the past, you can bet they don't really know the future. Worse, it's likely that not only will they be of little help, but they will also probably get you into trouble.
To recap: be wary, find as many quotes as possible, ask a lot of questions, and think all your options through before signing anything. Armed with this knowledge, go forth and find a good deal on a mortgage.
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