President's Message: How to shop around for a mortgage loan
Homebuyers who do mortgage loan shopping can avoid leaving money on the table.
The drill is usually the same whether you’re shopping for new bed sheets or a new car. Hit the reviews, check with friends and scope out the best deal. After all, who wants to buy a vehicle that racks up repair bills right away?
Yet, when picking a mortgage loan, borrowers don’t always think about comparison shopping. In a Bankrate survey of recent home buyers, 12% of millennials believed their mortgage rates were too high.
Some buyers may think that they don't need to shop for the best offer when mortgage rates are low. But even a few basis points can make a difference of thousands of dollars over the life of a loan.
You may think mortgage shopping is as enjoyable as prepping for a tax audit. That is true.
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.
First, find a few lenders to consider. Loan officers recommend going to a few sources – locals you know and trust, or lenders that have been referred from friends and family who’ve worked with them.
Wherever you have trust established is a good source. Next, ask your Realtor if they have any feedback or advice on a lender or a loan officer. Also look at reviews; if you see many really good reviews, that means people are taking the time to provide them.
Once you have decided on a few sources, have an introductory mortgage loan meeting during a meet-and-greet. You and the loan officer will usually ask each other questions, and the loan officer will use that information to assess your qualifications.
That may sound cut and dried, but the meeting should be fluid based on what you’re ready to do. From there, the loan officer would schedule another meeting focused on comparison shopping separately.
Today, buyers are well-versed and want to get right to what’s most relevant for them – financial and comparison details. But many people need to go over their questions or cover key topics first. Then, interview the mortgage loan officer whichever way you choose. This meeting is prime time to interview the loan officer to decide who will be the best fit.
Something to keep in mind is to find someone who will be in there with them and who can problem solve. Scope out the lender’s communication strategy and their process for delivering on time. The process is highly complex, and when a loan is not delivered on time, people’s finances and lives are basically balanced on the head of a pin, which is the closing date.
To avoid problems, ask questions like these – would you take me through the process?; what should I expect?; what will I need to supply?
When considering compatibility with a loan officer or mortgage banker – what’s your communication style?; are you willing to communicate virtually?; are you available in the evening?; will I be working with you or a member of your team?; what do you think of my timeframe to get to closing?; what if any issue do you foresee being a problem?
Track record of loan officer and lender – how long do loans you process typically take to close?; what ways could you expedite the process if there’s a tight timeframe?; about what percentage of loans you work on close on time?; what’s the biggest problem you’ve had with a loan and how did you fix it?
You can also use the meeting to clarify general information you’ve picked up online and discuss your concerns. You’ll also want to bring up concerns like the impact on your credit score. Thirty-eight percent of buyers think comparing multiple mortgage offers in a short time will hurt their credit rating, according to a 2020 LendingTree survey. As long as the lenders all pull the borrower’s credit within a couple of weeks, it’s counted as a single credit inquiry. So, this is not a problem.
Next, get and compare financial information. Whether you’re looking at a federal form called a loan estimate or the fees worksheet, you’ll see a breakout of closing costs. Compare the lender financials. Make sure you’re comparing apples to apples. If one lender offers a 30-year fixed rate at 2.875% with no lender fees and another offers 2.75% with $1,500 in lender fees, those are unlike products. Get the fees at the same rate to find out who’s less expensive.
Remember, when you're in the market to buy or sell a home, contact a Realtor member of the Stark Trumbull Board of Realtors.
Marlin Palich is president of Stark Trumbull Area Realtors, which serves Stark, Carroll and Trumbull counties. Visit www.star.realtor for a complete listing of Realtors and affiliate members. If you have any questions or comments on this article, contact Cosgrove at president@star.realtor.
This article originally appeared on The Repository: President's Message: How to shop around for a mortgage loan
