Mortgage interest rates are still near record lows, but that doesn’t mean you will get the same deal from every lender. Even in an attractive rate atmosphere it’s important to shop around to save yourself big time on your monthly payment as well as over the course of the loan.
Contact Several Lenders
Start your search by calling or emailing several different lenders. Your bank may be a good source of mortgage funding, but don’t count out local credit unions and mortgage companies. You could pick names out of your local phone directory or look up mortgage firms online, but the most successful way of finding good home loan lenders is often through referrals from friends. A friend’s positive experience means there’s a good chance that you’ll have the same experience. Wherever you find potential lenders, just be sure you contact more than one. That is the only way to compare costs and get the best deal.
Get Detailed Cost Estimates
Ask each of the lenders you contact the same questions about their rates and fee schedules. Many people only use the offered interest rate as a point of comparison, but so much more goes into a loan. A better measure of the actual cost of a loan is the annual percentage rate (APR). The APR factors in the interest rate as well as all other fees and charges associated with the mortgage. Make sure you ask each lender for a complete list of all the fees he charges, including things like points, loan origination fees, private mortgage insurance and closing costs. That way it’s easy to break down the charges for simple comparison among several mortgage lenders.
The final step is to let each lender know they are competing for your business and ask if they can possibly make a better offer. There is always room to negotiate. And lenders won’t be offended to know that you are looking at other options. Competing with others mortgage deals is part of their business.
The only way to know you are getting the best deal is if you have seen the full range of what’s available. And that requires shopping around.