Shop Around

When you are ready to buy a home you need to shop around for the best mortgage you can get. You need to hunt for the best interest rate and best mortgage out there. The Consumer Financial Protection Bureau says that about seven in 10 homebuyers only apply to one lender for their mortgage. That is totally ludicrous! Your home is one of the biggest purchases of your life. You want to ensure that you comparison shop to save money. Your current or local bank is not the only or best option.

Let’s look at some ways to hunt:

  1. You Set Your Own Budget Not the Lender. A mortgage lender is not looking out for your best interest. They want you to get sucked into the largest mortgage you can qualify for because that means more interest for them. You do not want the biggest mortgage for which you qualify. You want a mortgage that fits your budget. Avoid being house poor. Decide the size the size mortgage that fits your financial life. You do not want a mortgage payment that is so large it makes it hard or impossible for you to save for retirement, or for your child’s education. This would be a huge mistake. Instead of concentrating on how expensive or large a home you can qualify for, aim for the least expensive house that meets your needs. This gives you the financial flexibility you will need by not over-reaching it is going to make a huge difference the rest of your life.
  2. Shop, Shop, and Shop. As I said earlier your local or current bank is not going to necessarily offer you the best deal. You need to apply for at three different lenders. Get recommendations from friends, relatives, or colleagues of credit unions and community banks that offer good mortgages. These tend to often have better terms than big national banks. Also, shop online for lenders. There are some great deals to be had, if you shop around. There are even online banks that do everything without paper. What if you’re lazy and you don’t want to comparison shop? Well, remember this is your mortgage and it is your money. However, if you still feel someone else should do this for you, consider working with a mortgage broker. Not all mortgage brokers are good. Get recommendations friends, relatives, or colleagues. You also need to not only consider the advertised interest rate, you also want to compare all the fees you will be charged for the mortgage. As of last fall, lenders now must give all applicants an easy-to-understand three-page Loan Estimate once you provide basic information.
  3. Ensure Your Lender is a Winner. The lender you chose should have a solid track record of getting the deal done as quickly as possible. You don’t want a lender that takes a long time to finalize a mortgage. This will cause a ton of problems. Typically, when you make an offer on a home, you will agree to close within a specified period. If it is a sellers’ market, where sellers can choose from multiple offers, their agents will encourage them to consider offers from lenders who close on time.
  4. Use a Realtor. A good real estate agents is a great resource, They have access to the Multiple List Service (MLS), that lists tons of homes. Plus, they know which lenders are quick closers.

So remember, shop around for the best deal!


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