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When mortgage shopping, what should you do to get the best interest rate and loan terms?

Asked by Trulia New York, New York Tue Jan 29, 2013

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I think that all the best things you can do to get the best rate possible happens before you even shop for a mortgage. By saving as much as possible towards down payment and making sure your credit balances are low and all your bills paid on time, will put you in a position to obtain the best mortgage rate and terms.

i also tell people to NOT shop interest rates alone, but rather shop for the Loan Officer and/or mortgage company you feel will provide the best service along with fair rates. i've seen many people who go for a particular company simply because they offered the best rate, which almost all the time is not much different than what other banks offered, but yet have problems closing loans. You have larger banks who offer lower fees and rates, but is not willing to approve your loan because they're extrmemly conservative, then on the other side you have companies who are willing to take all the risks in the world to approve your loan but fees are through the roof. Find something in the middle, a bank whose menatlity is "every loan matters", a bank or Loan Officer who is known for working with Realtors and homebuyers, and delivers. This assures that the people you're working with see a variety of situations and have the experience necessary to deliver good service to a homebuyer. There is no way you'll get that over the internet or a phone.

Javier Meneses
NMLS #23130
Senior Loan Officer
Sterling National Bank
jmeneses@snb.com
1 vote Thank Flag Link Tue Jan 29, 2013
Ensuring you are working with a top-quality professional mortgage advisor, is the first critical part to getting a Great Deal! Here are the rules and secrets you must know to “shop” effectively.

First, IF IT SEEMS TOO GOOD TO BE TRUE, IT PROBABLY IS. But you didn’t really need me to tell you that, did you? Mortgage money and interest rates all come from the same places, and if something sounds really unbelievable, better ask a few more questions and find the hook. Is there a prepayment penalty? If the rate seems incredible, are there extra fees? What is the length of the lock-in? If fees are discounted, is it built into a higher interest rate?

Second, YOU GET WHAT YOU PAY FOR. If you are looking for the cheapest deal out there, understand that you are placing a hugely important process into the hands of the lowest bidder. Best case, expect very little advice, experience and personal service. Worst case, expect that you may not close at all. All too often, you don’t know until it’s too late that cheapest isn’t BEST. But if you want the cheapest quote – head on out to the Internet, and we wish you good luck. Just remember that if you’ve heard any horror stories from family members, friends or coworkers about missed closing dates, or big surprise changes at the last minute on interest rate or costs…these are often due to working with discount or internet lenders who may have a serious lack of experience. Most importantly, remember that the cheapest rate on the wrong strategy can cost you thousands more in the long run. This is the largest financial transaction most people will make in their lifetime. That being said – we are not the cheapest. Of course our rates and costs are very competitive, but we have also invested in the systems and team we need to ensure the top quality experience that you deserve. Additionally, to preserve our position to getting you a great deal we offer you a FREE float-down after locking and within 20 days of closing. Most lenders will charge you up to 1 point to float down if rates improve.

Third, MAKE CORRECT COMPARISONS. When looking at estimates, don’t simply look at the bottom line. You absolutely must compare lender fees to lender fees, as these are the only ones that the lender controls. And make sure lender fees are not “hidden” down amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they are third party fees – they are often under-quoted by 10% up front by a lender to make their bottom line appear lower, since they know that many consumers are not educated to NOT simply look at the bottom line! APR? Easily manipulated as well, and worthless as a tool of comparison.

Fourth, UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND. This
means that you can have any interest rate that you want – but you may pay more in costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all – but understand that this comes at the expense of a higher interest rate. Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are. A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.

Fifth, UNDERSTAND THAT INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY. This means that if you are comparing lender rates and fees – this is a moving target on an hourly basis. For example, if you have two lenders that you just can’t decide between and want a quote from each – you must get this quote at the exact same time on the exact same day with the exact same terms or it will not be an accurate comparison. You also must know the length of the lock you are looking for, since longer rate locks typically have slightly higher rates. Again, our advice to you is to be smart. Ask questions. Get answers.

As you can imagine, we wouldn’t be encouraging you to shop around if we weren’t pretty confident that we feel that we can give you a great value and serve you the very best. Please call us with any further questions you may have at this time – we are ready to work for your best interest!

H. Roy Bhiro
609-351-3619
718-390-7200
rbhiro@primelending.com
http://www.royhomeloans.com
0 votes Thank Flag Link Wed Apr 23, 2014
It would best to work with a mortgage broker as they would have the flexibility to shop around with different lenders for the best interest rate and loan terms in your situation. There is no universal best interest rate and loan terms as every borrower situation is different because of credit, income, down payment etc.. Once your own situation is analyzed mortgage broker can get the best rate and terms but reducing their compensation to win your business. You can easily determine broker compensation from the Good Faith Estimate. Under the current laws mortgage brokers have the ultimate burden of being transparent when disclosing fees, loan terms, rates etc.

You can contact me to discuss.

Sanjeev Ahuja NMLS # 148731
Mortgage Broker
Home Funding LLC
110 Jericho Turnpike Ste 214
Floral Park, NY 11001
Direct Ph 917-517-2552
NYS Registered Broker, Department of Financial Services, Loans Arranged through third parties NMLS # 885573
0 votes Thank Flag Link Sat Nov 16, 2013
Easy answer is shop around. Just make sure to compare what you are getting. Some mortgages come with points (sometimes called origination fees), while others do not. I would reccomend staying away from adjustible mortgages unless you are not planning to stay for a long period of time.
0 votes Thank Flag Link Tue Jan 29, 2013
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