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· Most buyers don’t shop around for a mortgage
· Choosing the first mortgage option offered can be a costly mistake
· Keep this list in mind when mortgage shopping
Did you know that if you don’t comparison-shop for mortgages, you could be leaving money on the table? A recent survey completed by PenFed, a credit union, showed that two-thirds of mortgage applicants did not shop around. This can prove to be a costly mistake. In fact, a Freddie Mac study indicated that buyers can potentially save $1500 over the life of a traditional loan by simply getting one additional rate quote when mortgage shopping.
If you’re in the process of buying a house, or plan to do so in the near future, here are some things to keep in mind when comparing mortgages:
1. Don’t assume that the best mortgage is the one with the lowest interest rate. This isn’t always true. Closing costs and other factors should be considered as well.
2. Adjustable rate mortgages are not just for risk takers. In some cases, they may ensure lower payments than a traditional, 30-year mortgage.
3. Your credit rating will not be lowered when lenders pull your report. Credit agencies cut people slack because mortgage-related queries result in a single loan.
4. Find out the additional costs for a mortgage that sounds perfect: in addition to closing costs, ask about loan-origination or underwriting fees, points, and broker fees.
5. Ask a lender if they will match terms you’ve found elsewhere – this creates a competition between lenders that often lands a lower rate for the borrower.
6. Study lenders’ histories, including pricing and service. You can easily find out a lender’s reputation for customer service by Googling them.
7. Include online lenders in your search. Typically, online lenders have lower business overhead and can pass their savings on to you.
8. Educate yourself about mortgage terms. The more you know, the better off you are in a negotiation process.
Getting the best mortgage rate requires discipline and focus. If you understand the terminology, are aware of all costs and fees, and are not be afraid to negotiate, you will be in a great position to save money. You’re likely to live with your next mortgage for a long time, so it’s important to do it right!