How to Get a Better Deal by Shopping for Your Next Mortgage

In today’s savvy consumer world, we know everything about the latest smartphone technology and the best new sports shoes on the market. But do most potential and current homeowners do the same research on mortgages? Surprisingly, the answer is no. The U. S. Consumer Financial Protection Bureau reports that most people do not shop around for the best mortgage rates, even though that act alone could save thousands over the life of a loan.

Check Your Credit Report

The first step before you begin looking at mortgages is to make sure you are financially in order. You need to be prepared for all the documents and questions lenders will have in order to quote you their rates. Whether you are looking to buy new or refinance, first check your credit report to make sure there are no red flags. If you have fallen behind in your bills, create a budget plan to repay your debts first before moving forward with a refi. You’ll get better rates.

Limit Your Search to Two Weeks

Once you do begin asking for quotes from different lending agencies, mark your calendar. Each of these lenders will perform what is known as a “hard inquiry” on your credit report. Too many of these can negatively impact your credit score, but FICO provides a two-week grace period when you are shopping around for a loan. If you find your lender within two weeks, there won’t be any impact to your credit score.

Do Your Homework

The reason that most people do not shop around for mortgages is because they assume that all the rates are the same. That’s simply not true! The Consumer Financial Protection Bureau reported that rates can vary up to 1 percent, which can mean as much as $100 savings every month (or even more, depending on the size of your mortgage). That’s money you can put away in savings, especially if you’ve used the loan as a refi to pay off your other high-interest debt.

Ask About Other Loan Products

When you are talking to mortgage companies and lenders, be sure to ask about other loans that may be available to you. If you are a veteran, for example, you will likely qualify for a VA loan, and your rates may be substantially lower.

When you’re ready to start shopping for a loan, go to Refi.com to learn more.

Sources:

https://www.consumerfinance.gov/about-us/blog/one-thing-you-can-do-take-control-homebuying-process-and-save-your-new-home-any-housing-market/