Today’s consumer is typically a more astute buyer when it comes to shopping around for the best deal. The Internet era allows us to price out items from traditional brick & mortar stores, to online only retailers, or even second hand sites like eBay or Craigslist. So you’d think that perhaps the largest payment a family is likely to make such as a mortgage would be shopped extensively. However, it might surprise you that 40% of home buyers obtain only one mortgage loan quote before choosing which mortgage to proceed with. Not only that, but a mere 28% of buyers say they’re confident they got the best mortgage deal available to them.
So why don’t buyers take the time to shop for the best deal on such a large item? Well, according to a poll conducted by Lending Tree nearly 70% of the respondents said they find shopping for a mortgage to be a frustrating experience. More than 20% of those respondents indicated the complexity of the terms made shopping mortgages difficult while another 20% were exacerbated with the amount of time it takes. While searching for the best loan may not be appealing, it should be endured at the very least to make sure you’re spending as little money as possible. It’s a safe bet some percentage of those discouraged from shopping mortgages clip grocery coupons that might save them 50 cents, than why not take the time to learn more about mortgages to save hundreds and thousands.
It’s ALWAYS a good idea to shop multiple lenders and even different types of loan products. It can be overwhelming at times especially when one lender may have a better deal than another on one mortgage product, but a worse deal on another type of product. So here are a couple basic things to keep in mind to help you shop around:
- Check with multiple lenders (Bank of America, Chase, Wells Fargo, etc.)
- Explore both mortgage bankers and mortgage brokers (bankers directly fund at least a portion of their loans while mortgage brokers typically only act as an intermediary shopping for the best loans from multiple lending sources)
- Look at various mortgage types to decide which product is the correct choice (fixed mortgages are good, but may not be best for everyone and even term of mortgage is critical)
- Learn the key terms and focus on all aspects of the loan including rate, discount points, and other fees such as origination fees that may be assessed
By shopping around for a mortgage you will likely spend some precious time upfront, but it can literally save thousands in the long run. Also don’t be afraid to ask for advice from your tax or finance professional to guide you.
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