What’s the Best Way to Shop for the Best Rate?

In today’s market, never before have buyers had more options to search for mortgage rates, from Internet-based mortgage companies to direct lenders (banks) to mortgage brokers. However you decide to proceed, it is most important to inform your loan consultant of your personal goals and to shop for a loan that fits your specific needs. How long are you planning to live in the home? Are you planning a family? Do you have children that will be getting married and moving out? Do you have children that intend to go to college in the future? These are all questions that can help your Loan Consultant determine the best program for you, and help you to secure a sound financial future. Here is a breakdown of the methods of shopping rates:

Online:

Most people feel that rate shopping is a breeze with easy access to hundreds of Internet-based mortgage companies. However, many advertisers make their rates look appealing but don’t give you the whole picture. Some of the most common deceptions are:

• Quoting a very brief lock-in period;
• Assuming you want an impound account;
• Charging points;
• Charging undisclosed fees; and
• Incorrectly calculating the Annual Percentage Rate (APR).

Even more important than this list is the feasibility of the on-line lender to effectively manage the loan process remotely. During the escrow process, there are typically more than ten parties involved and hundreds of pages of documents going back and forth…needless to say, there are many potential points of failure in the escrow process. One question that you may want to consider is how effectively you feel that a remote, Internet-based mortgage company can quickly react to and rectify a situation if something goes wrong during escrow.  Not to mention, with the recent surge in identity theft, you might be better off working with someone you know or whom is a referral.

Direct Lender (Bank):

With no idea where to start, many people find that walking into their own bank is a good way to begin shopping for home loan rates and programs. Although you may get lucky, the odds that an individual’s bank is offering the most competitive rates and programs that exactly matches your unique requirements are fairly slim. The reason is that each of the hundreds of banking institutions change rates one to two times a day. In addition, most banks have a particular loan product that they promote every quarter to increase business; this program may or may not be what is best for you.

Mortgage Broker:

For those of you who like working with a ‘live’ person with the ability to shop around for the best rates and programs, a mortgage broker may be the way to go; just make sure that your mortgage broker is someone whom you trust and that he/she is not charging exorbitant fees.

Whether or not your have good credit, a large income or a down payment, a good mortgage broker will be able to offer you competitive loan options which meet your individual needs by accessing up to hundreds of banks instantaneously. In addition, your mortgage broker should be there for you in the event that an issue arises during escrow