Mortgage Shopping in Today's Market
Mortgages for your peace of mind
Shopping for a mortgage in today's marketplace can be a daunting and overwhelming undertaking for an inexperienced or under-informed homebuyer, but it doesn't have to be. Properly comparing loan products and considering all costs involved in a new home purchase or refinance transaction is vital to understanding which mortgage is right for your current situation.
Below are a few guidelines to consider when making decisions on your mortgage:
1. If it seems 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, you’d better ask a few questions and find the hook. Is there a pre-payment penalty? If the rate seems incredible for the loan program, are there extra fees? What is the length the rate will be locked in? If the fees are discounted, is it built into a higher interest rate?
2. You get what you pay for. If you’re looking for the cheapest deal out there, understand that you’re placing an immensely 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 your loan! All too often, you don’t know until it’s too late that the cheapest isn’t the best. But if you want the cheapest quote, head out onto the internet, and make sure you read the fine print. Just remember
that if you’ve read the headlines or heard the horror stories from family members, friends or coworkers about missed closing dates or big surprise changes to interest rates or costs at the last minute, these are often due to working with discount or internet lenders who may have a serious lack of experience. This is likely the largest financial transaction that you’ll make in your lifetime. That being said, we are not the cheapest. Of course we’re competitive, but we’ve also invested in the systems and people we need to ensure the top-quality experience that you deserve.
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3. Make correct comparisons. When looking at estimates, don’t simply look at the bottom line. You absolutely must compare lender fees, as these are the only ones that the lender actually controls. Make sure lender fees are not “hidden” amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they’re third party fees,they’re often under-quoted up front by a lender to make their bottom line appear lower, since they know that many consumers are informed to NOT simply look for the bottom line! Ask for a detailed Good Faith estimate and ask questions.
4. 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 current market. 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 potentially higher interest rate. Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are.
5. Understand that rates can change daily— even hourly! This means that if you are comparing lender rates and fees, they’re a moving target. For example, if you have two lenders that you just can’t decide between and you want a quote from each, you
must get this quote at the same time on the same day with the same terms or it will not be an accurate comparison. You must also know the length of the lock period and know that longer lock periods typically have slightly higher interest rates.
At Fairway Independent Mortgage Corporation, our Loan Officers are trained to educate consumers thoroughly during a transaction and are held to the highest standard of integrity in advising homebuyers on which products are in their best interest.
Find a licensed and qualified Arizona Mortgage Loan Officer HERE