I love my sister-in-law, I truly do. And when she asked me what to do to ensure she gets the best mortgage loan terms, my answer to her was pretty simple.
Call me sis, we’re family, I’ll make sure you’re taken care of.
Her reply was priceless leaving all of us laughing.
I get that and I have no doubt you will, with this said, how do I make sure you are giving me the best deal and how can I double check the loan options you provide?
What a great question right? So Stevie, here is your answer on how to effectively shop to ensure you receive the best home loan available.
When shopping for a loan and/or comparing one mortgage lender, bank or credit union to another, there are three questions to ask that will reveal the tangible items to pay attention to. Me being her brother-in-law is intangible and although intangible benefits are often priceless, our intention is to review the tangible items.
Quick side note, if you’re interested in exploring your loan options, provide the information below to your lender and they should be able to get you detailed options without a hard credit inquiry and in minutes not days. If not, think Blink as our Team would love to provide you options.
- Transaction Type – are you purchasing a home, refinancing or cashing out?
- Desired Loan Term – 15, 20 or 30 year loan term?
- Credit Score – what is it and where was that score obtained?
- Equity – if purchasing, what is purchase price and down payments? If refinancing or cashing out, how much is the current loan balance and current market value of the home?
Question #1 – What is my interest rate?
We all know to ask about interest rates, however what many people don’t understand is that every rate available to you has a price (called discount points) associated with that rate. One company may offer you a 2.75% with 1% in discount points while the other may offer you a rate 3.25% with a discount credit of .5%. Determining which is better is a personal choice, do you value lower costs and a higher payment or are you ok with higher cost and a lower payment. One key factor in this decision is how long will you be in the house and how long will it take to recoup the cost in savings.
Question #2 – What are your fees?
This question is not near as straightforward as you may think. Fees come in all format when it comes to mortgage loans, some the lender control others are controlled by third parties and yet other fees are just reserves set up for you, ie. Escrows. Personally I would only concern my self with lender & lawyer fees these will be items like processing, underwriting, administration, doc prep & origination. These are the fees that your lender controls, title fees are managed by the Texas Department of Insurance and should not vary from title company to title company by more than a few hundred dollars. Escrows are set up for your benefit and usually include a reserve format so that your insurance can be paid when it is due and your taxes can be paid in December. The bottom line is that title fees and escrows should be the same for every lender, while lender and lawyer fees will differ.
Question #3 – How long will this process take?
In this particular market this is a very important question, with current volumes some lenders will take months to close your loan and that needs to be factored into your closing cost the money you are saving by going with a quicker slightly more expensive company vs. going with the often cheaper & slower big bank. One time I had a client choose Capital One over myself on a larger loan where I would have saved them over $500/mo. I followed up with them 4 months later and they had not closed so there costs were now over $2,000 greater than originally thought and they were not beating my by that much not even close, they were only a couple hundred dollars better and an 1/8th of a percent better in rate. Short story long they took another month to close and paid way more in fees to save $22/mo.
