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The Truth About Shopping for Mortgage Rates
With so much lender advertising focusing just on rates, you
may not be aware of the importance in choosing an experienced,
reliable loan professional who can match you with the appropriate
loan program. Good loan officers and mortgage brokers may quote
today's rate when asked, but they will quickly add they need to
know more about you to determine the best program for your
individual situation. So rather than asking questions, you should
be prepared for, in fact looking for, a loan officer who asks you
questions about your credit history, employment, income, down
payment, and future plans.
With the ever-changing variety of loan programs, there's a lot
to learn about what's available and which program could suit you
best. Here are a few loan options: Fixed rate. 15 year, 20 year,
30 year. Adjustable rate. Adjusts after 6 months, 1 year, 3
years, 5 years, 7 years or 2-step. Low down payment. No down
payment. 80% first/20% equity. Over 100% LTV. Interest only.
Buy-down. Reverse. Convertible. Balloon payment. Bi-weekly
payments. Conforming. Non-conforming. Conventional. FHA. VA.
First-time home buyer. Special government programs.
Self-employed. Full documents. Low documents. No documents.
Credit-challenges. Bankruptcy. Unique property. Whew! And there's
more, which is why finding a knowledgeable, trustworthy loan
professional should be your first consideration.
Also, rates are time sensitive. The eye-catching ad you see in
the newspaper was probably prepared at least five days ago. Rates
may change several times a day as well, and, without a lock-in, a
quote doesn't mean a thing. And don't you wonder how every lender
claims to have the best rate? Retired mortgage banker George
Chaney said, "A buyer who rate shops may be getting quoted
today's rate from one company, tomorrow's rate from another, and
a bet on next week's rates from a third. It's like comparing
apples to oranges to pears, and the clients will never know what
they're getting. In reality, the number one priority for the
average home buyer should and must be the quality of the counsel
they get, how the products meet their needs, then the rate, then
the costs to close."
According to Brian Sacks, Branch Manager of Integrity Home
Funding, in Owen Mills, Maryland, and expert on assisting
borrowers nationwide with credit challenges and bankeruptcies,
"Consumers don't usually shop for the cheapest attorney or
physician when they need help in those areas, but they'll shop
strictly by rate when they need a mortgage. That's mostly because
they don't understand the loan options available to them. They're
thinking plain vanilla 30-year fixed rate. They don't realize a
mortgage broker will find them the best loan program first, then
find them the best rate. Plus there's the strange one-upsmanship
caused by family and friends comparing rates and bragging if they
have a rate that's one-eighth less. It's natural for everyone to
want the lowest rate, but the most important consideration is
getting the right loan program with the best rate possible for
that particular borrower's circumstances."
Tom Ward, CEO/Founder, Majestic Mortgage Corporation,
headquartered in Vernon Hills, Illinois, agrees: "It's almost
universal that the first question on first contact with a
consumer seeking a mortgage is: 'What's your rate?' It's no
different in Florida than in Washington state. Consumers are
conditioned by advertising, and not just by online lenders like
Lending Tree, that price is their only concern."
Comparing Internet rates to traditional lenders, Tom adds,
"Our own comparison of note rate to note rate and APR to APR
shows Internet 'best price' claims proved hollow. The Wall Street
Journal has also reported on the fallacy of 'best price' on the
Internet."
"If it sounds too good to be true, it is," says Brian
Yampolsky, Owner of Orion Mortgage, in Phoenix, Arizona. "Listen
to that voice inside your head that tells you when to be
skeptical. It's there for a reason. Often times, lenders put
their best foot forward? They'll make assumptions on certain
factors that can affect the rate, such as the size of the loan,
the amount of down payment, if a primary residence will secure
the loan, if the credit scores are high enough, etc., etc. If you
don't fall into that box of assumptions, then it's unlikely you
would be able to get that rate.
"So, whether you're buying a new home or trying to decide if
it's worth refinancing, do yourself a favor. Forget the allure of
artificially low rate ads and ask someone you know and trust for
the name of a trusted mortgage broker. He or she should be able
to educate and advise you on how to save your money and time and
prevent you from making costly mistakes when choosing your next
mortgage."
These days, there's another consideration that's more
important than rate: Competence. Whether or not you're able to
buy the home you want may well depend on how reliable your loan
officer is. In hot real estate markets, sellers are taking backup
offers with higher sales prices. As a result, they may hope the
first transaction falls through. Under normal circumstances, if
your lender doesn't comply with a specific contract condition,
the seller would let it slide. In a hot market, where more
lucrative backup contracts are common, if your lender misses a
deadline in the contract, it could cost you your dream home. The
best rate in the world is worthless if incompetence means your
transaction doesn't close.
So how do you find a loan professional you can trust? Start
with referrals from people you know: family, friends, real estate
agents, escrow officers, attorneys, accountants? A referral is
unquestionably your best bet at finding a loan officer with a
proven history who knows how to close a loan.
Good luck with your search for the loan officer and loan
program that are right for you. Obtaining a home loan can be
stressful, but working with an expert will lower the anxiety and
better ensure a positive result.
About the Author:
Sharon Hassler was a successful loan officer and real estate
agent in Southern California, then served as Communications
Manager for First American Title-Arizona for 11 years. She is
President of Go Get Experts, owner and operator of GoGetLoan.com, a web
page directory for mortgage brokers and loan officers, along with
GoGetEscrow.com, GoGetNotary.com
and GoGetHome.com.
Copyright © 2005, Go Get Experts, for GoGetLoan.com. All
Rights Reserved. Permission to reprint this article is granted if
the article is reproduced in its entirety, without editing,
including author's information. When using this article in
magazines or newsletters or online publications, please include
the full URL or a hyperlink to http://www.GoGetLoan.com
 MORE RESOURCES updated Thu. February / 09 / 2012
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