Shopping for a Mortgage
If you're shopping for a mortgage, you may have noticed that you’ve started getting a lot of calls and mail from mortgage companies.
You may be wondering how they knew you were in the market for a mortgage – especially if you've talked to only one lender.
Trigger Marketing
Here’s a secret few people know. When you apply for a mortgage, and a mortgage company pulls your credit, it sets off a “trigger” at the credit bureau. The credit bureau (not the mortgage company) then sells your information to trigger companies who try to steal your business away from the original mortgage company.
Don't I Want Multiple Offers?
There’s nothing wrong with a little healthy competition. It can help you get the best loan package and rate possible. The problems start when multiple trigger companies offer different things. It’s easy to get swept up in an offer that seems better, but that ends up not saving you the most money or even meeting your original goals.
But don’t worry, there are a couple of rules you can follow that will help you get the best deal for your situation.
If you plan to escrow your property taxes and insurance into your monthly payment, know how much those amounts are. If you allow companies to estimate these amounts for you, the payments and closing costs will be manipulated and could leave you with bigger costs.
Rule #2: Let each lender to pull your creditYour mortgage rate is driven primarily by your credit score. All lenders rely on credit reports they pull themselves to price your loan. If you are trying to protect your credit by telling lenders you have your own credit report or know your credit score, the quotes you get are worthless.
Rule #3: Use the same home value with each lenderThis is a big one. Everything is based on the value of the home. To ensure lenders are providing you with sound numbers, you MUST use the same home value estimate with each one of them to get an accurate comparison.
Rule #4: Use the same loan amount with each lenderThe same as home value, if you tell one lender you want to borrow $225,000 and another lender that you want $235,000, the $10,000 swing makes a huge difference in the rate you’ll be quoted.
Rule #5: Get all your quotes in writingAny quote you receive over the phone is meaningless. The only quote that matters is the one you receive in writing – the Good Faith Estimate (GFE).
The GFE is important for three reasons:
- It's required by law.
- It gives you an estimate of your loan terms.
- It lists your estimated settlement charges at closing.
Using GFEs from multiple lenders, you can then compare loans based on meaningful numbers including: home value, amount of loan, term, rate, and closing costs. If a lender delays giving you a GFE, go elsewhere.
No matter which lender you end up using, keep these guidelines in mind when shopping for a mortgage. And remember; always choose a company you feel comfortable doing business with.
Have questions about rates or loan products quoted by other lenders?
Call our office at 877-878-0100.
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