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This is the third installment of the Mortgage Shopping series. In the first installment, I went over how Rate Shopping can Hurt Your FICO Score. In installment two I reminded you of a forgotten concept in mortgages: You Get What You Pay For. I left a major question unanswered, “If I shouldn’t be shopping, then how to I find the best deal on a mortgage?”
The answer is, you should be shopping. OK, now I’m contradicting myself, right? Not exactly. If you’re going to shop, you could create a huge list of banks you want to contact, spend hours, days, weeks on the phone with these banks, asking for rate quotes and comparing offers. Finally, at the end of what seems like a fruitfully shopping session, you go with the bank that seems to offer the best rates and lowest costs. You’re may be satisfied at this point, but what you don’t realize is that rates change every day. The bank you finally do business with may not actually have the best rates, you just happened to contact them on a low rate day. Another bank may very well have been the best choice; I don’t recommend this form of “shopping”.
The form of shopping I recommend can be likened to interviewing a potential employee, or a housekeeper, or a even a babysitter. The form of shopping I recommend is shopping for a mortgage broker; and I certainly don’t advocated comparing rates like in the example above.
When shopping for a mortgage broker, there are two things you absolutely must determine. First, does the guy even know what he’s talking about? There are so many people in this business who don’t know the first thing about the mortgage industry, all they know how to do is sell. I know a lot of these people personally, and a lot of them are very successful; unfortunately the successful ones are mostly scam artists. Ask each broker some questions about the market, like where do you expect interest rates to go over the next few weeks and why? Ask him what he thinks your best program options are and why. You also need to determine if this guy’s trustworthy and has your best interests in mind. Well, how can we tell if someone’s trustworthy? I wish I could tell you a specific answer to that question. What I can tell you is to use your gut and ask a lot of questions. The questions should be open-ended, and the purpose is to find out if he’s feeding you…well, you know what I mean. You’ve got to know you can trust your broker, because he holds your future in his hands. You’ve got to feel like he’s in your corner and not like he’s trying to sell you something. It’s a personally decision only you can make after interviewing several brokers, but your decision shouldn’t be based on rate and costs.
I have to be honest with you, this is easier said than done, which is why, once you find a knowledgeable mortgage broker you can trust, never let him go.
Related Articles:
Who Has Your Social Security Number?Mortgage Shopping - It’s A Jungle Out There
Mortgages - You Get What You Pay For
When You Should Pay $10,000 in Points to Refinance
Rate Shopping - The Story of The Too Low FICO