Looking for the cheapest loan is not always in your best interest
Searching for a top quality professional can be tedious, but following a few simple steps below can help you to become a wiser home owner.
- Remember the saying your mom told you… “If it seems to good to be true then it probably is.”
Mom knew what she was talking about from experience. Mortgage rates all come from the same place so why would one deal look more attractive than another? You must ask more questions. For example, is there a rate buy down? Is there a pre-payment penalty? How long is the lock period? Or, if fees are incredibly low, then is the discount built into a higher interest rate?
You get what you pay forHomes are often our largest asset. Be careful placing the future of your largest possession in the hands of the lowest bidder. When you think you are finding a great deal, you may in fact be bargaining for lack of experience or less attention to your loan. You unfortunately won’t know this until it’s too late. Deadlines can be easily missed. For example a closing date may not be met or a lock period could expire. Worse, you could find out at the last minute that your interest rate changed, the closing costs are more or you are getting less cash back at closing.
- Compare Apples to Apples
Compare fees and not the bottom line when reviewing the good faith estimate. The origination fee is the only fee a loan officer has final control over. Additionally, the loan officer must estimate up front all fees associated with the loan. So, it is possible that they will under quote the third party fees up front to make their bottom line appear better.
- Understand that interest rates and closing costs are connected
You can have any interest rate you want but you will pay more in costs if the rate is less than the norm. On the other hand, you may pay discounted fees, reduced fees or no fees at all but know that this comes at the expense of a higher interest rate.
- Interest rates change daily
If you are comparing lenders rates and fees, you must get the quote at the exact same time on the exact same day with the exact same term or it will not be an accurate comparison. The length of the lock period can also affect the rate.
I am confident that your search to find a trusted advisor will bring you back here, so please feel free to ask questions