OK let’s talk about shopping rates! This is every customers headache and every loan officer’s nightmare… WHY you ask? Because of the misinformation in the marketplace and the deceptive practices of “some”.
Home buyers typically dread shopping rates because it feels similar to shopping for a new car. Once engaged, the evil sales guy is going to be relentless and pushy in trying to get you to sign with him, right? It really doesn’t have to be that way. Many customers get frustrated because they don’t get straight answers fast enough and get tired of swimming through the sea of sales jargon.
Loan officers detest “rate shoppers” because they feel that no matter how highly they are recommended and how good their service, some consumers are never satisfied until some smuck lies to them and offers something that is too good to be true. The new good faith estimate has cut down on the dishonest games played in the industry but they are still out there.
I believe that shopping for a great mortgage rate doesn’t have to be a negative experience for buyer or lender! The key is understanding a few simple truths.
The most important thing to understand is that almost all lenders get the money from the same places and for the same prices. Even the biggest banks like Bank of America and Wells Fargo seldom hold loans and service them forever. Most mortgages are sold and that open market determines the starting point for rates. Now each lender might have a slightly different margin and therefore rates can be a little different from lender to lender, but…
NO lender is going to beat any other lender by very much!!
This is VERY important to understand because if three lenders quote you 4.75% and one lender quotes you 4.00% – guess who is lying! Something is wrong, and you need to stay away from any lender quoting rates, fees or processing times that are vastly superior to everyone else. I know you want that 2% 30 year fixed with no costs and the ability to close in a week, but trust me, you are better off buying a lottery ticket!
When it comes time to shop rates, ask your Realtor for a referral to a good loan officer that they have had success with in the past. Then start the process with that loan officer, and feel free to call one or two other local lenders for a rate comparison. Be honest with the ones you call and let them know you are simply looking to compare a rate quote you already have. If you get anything .25% better then ask the lender you are working with about it and push for them to match or at least get within .125%. That way you know you are getting solid service and a competitive rate.