Mortgage Q&A: “How many mortgage quotes should I get?”
When it comes to getting the best deal on your mortgage, you can never shop too much.
Just like any other product you may comparison shop for, the more time you put in, the better deal you’ll probably receive.
Sure, it’s a pain in the you know what, but you’re not shopping for a plasma TV. This is your mortgage, most likely one of the largest financial decisions you’ll make in your life.
So not spending a considerable amount of time shopping for one would be very ill advised. Don’t be one of the many individuals who obtains just one mortgage quote!
Look At Mortgage Rates Online
These days, we’ve got the luxury of using the Internet to comparison shop.
Back when, you had to scour the phonebook and make phone call after phone call to check on prices and availability. I remember doing this to buy a pair of high-tops when I was around 10-years old. I spent a considerable amount of time trying to track down a pair at the lowest price.
Nowadays, a simple click of the mouse will allow you do most of that tedious work, though you’ll still have to vet the broker or lender after the fact to make sure the quote is legit and they’re a reliable source.
I recommend checking as many channels as possible to see where mortgage rates are currently pricing.
You can check out today’s mortgage rates from a variety of online lenders, as well as looking up averages from the MBA, Freddie Mac, and Bankrate, and also Zillow. Watch them for a few weeks to get a good idea as to how they move and why.
Knowing which product you’re after will make your search a lot easier, though you can still narrow it down to a couple products and rate shop accordingly.
Calls Banks, Mortgage Brokers, Credit Unions, You Name It
So you know what most banks and lenders are charging for a variety of loan programs. Great! Now it’s time to get real mortgage rate quotes.
You may be in for a surprise, as those rates you see are often either best case scenario or simply advertising rates aimed at drawing you in.
For example, the rates you see on TV or online may be for a borrower with an 800 credit score and a 40% down payment on an owner-occupied single-family residence. Oh, and a couple mortgage points must be paid at closing too.
Of course, your loan scenario may not be so “vanilla,” so the mortgage rate your quoted could shock you somewhat. Fret not though; this is why you’re shopping.
Typically, they offer discounts to existing customers who agree to things like automatic billpay, knowing you’re good for that mortgage payment every month because of the money you’ve got in their bank.
But don’t stop there. Find a mortgage broker or two (I recommend three) and get rate quotes from them as well. See how they stack up against your bank/credit union and go from there.
Negotiate, Negotiate, Negotiate
The beauty of receiving multiple rate quotes is that you can negotiate. With just one, there’s not much you can do aside from asking/pleading for a lower rate. Well, you can lie too.
But if you’ve got multiple companies vying for your precious business, you can pit them against each other until one comes out on top by offering the lowest rate with the best terms.
You’ll also grow more confident as you discuss rates and fees with multiple lenders, learning the lingo as you go. This should aid in negotiating more effectively.
Just be sure to look at all the details when comparing offers, including all costs (lender and third-party fees), the interest rate, and the APR.
It’s not always easy to get an apples-to-apples comparison, so you may actually have to do some math.
I know, it’s annoying, but as mentioned earlier, this is a huge financial decision, so a little homework can go a long way. You might actually get your money’s worth.
Read more: Are mortgage rates negotiable?