A guide to finding a home loan

Mortgages might not be as fun to buy as new shoes or a new car, but if you know how to do smart comparison shopping, you’re going to save yourself a lot of hassle… and a huge amount of change. Part of this will require a change in attitude. Because while most of us are already well aware that you’ll need to see a lot of homes before you find The One, a lot of people take the first mortgage that comes along.

In fact, nearly half of consumers aren’t looking for a mortgage at all, according to a report from the Consumer Financial Protection Bureau.

But this is a big mistake. Don’t settle for the first option you think of, even if it’s the one with the coolest ads or from your own bank all along the block. It pays to look around. Here’s why and how to shop for a mortgage right.

What to look for in a lender

Here are several good reasons why it pays to compare and consider your options when choosing a mortgage:

  • Lenders offer different rates: Even though the mortgage product they offer is essentially the same, say a conventional 30-year fixed rate loan, the rates can vary by more than half a percent, and that half percent can add up quickly. Take the example of a mortgage of $ 250,000. If your interest rate is 3.0%, your monthly payment will be $ 1,054 and you will pay $ 129,444 in interest over the term of the loan. If your interest rate were half a percent higher, at 3.5%, you would pay $ 1,123 each month for a total of $ 154,140 in interest. That’s almost $ 25,000 more in interest payments just over the life of the loan.
  • Lenders have different programs: Because there are so many different types of mortgages out there, you would do well to talk to someone who can really sit down and articulate the pros and cons. Some borrowers are better suited to a conventional fixed-rate product, while another who does not plan to stay in the home for more than about 10 years might end up paying much less with a 15-year loan or home mortgage. revisable rate. . Every homeowner’s situation is different, so it is essential to discuss the different options with a knowledgeable lender.
  • Lenders have different offers: Mortgages are obviously a business, so lenders have to make money. In a competitive environment, you may find that some offer to pay closing costs or offer other benefits while others may boast faster processing. Shopping around allows you to find the best deal for you.
  • Lenders charge different fees: Many lenders charge a long list of fees: loan origination, title insurance, loan application, rate freeze (which protects you from rate fluctuations during the process), and more. You’ll want to know what fees everyone charges and see if any of the lenders you’re considering are willing to negotiate by reducing or waiving a few of those fees altogether.
  • Lenders have different standards: Do you have a blemish on your credit history that could prevent you from getting a good loan? Different lenders have different standards, so just because one of them is turning you down or not offering you a great interest rate doesn’t mean that others will too.

Where to look for a mortgage

There are three main places where you can get a mortgage:

  • Banks: Your bank may be the first entity you think of, as a one-stop-shop for your financial matters can make your life a lot easier. A bank can be a great choice if you already have a strong working relationship. If you’ve been a trustworthy customer over the years, your bank can often offer great rates. However, sometimes you need to be a little more financially savvy when working with a bank to make sure their proprietary products are best for you and your situation.
  • Mortgage brokers: These professionals are also a great option, mainly because they are specialists. They know more about the wide variety of loan programs available and may be better equipped to help you think through creative options. Since they work with a wide variety of lenders, they can do a lot of work to find you the best rate and great deals out of a variety of offers. But you’ll want to make sure they’re trustworthy and have your best interests at heart, not the lender’s. Check their credentials online and talk to several before choosing a provider.
  • In line: Everyone buys everything online these days, so why not mortgages? At realtor.com/mortgage/rates you can compare offers in your area.
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