How to Shop Around for a Mortgage
You’d never buy a new phone or sign up for cable without shopping around for the best deal. So why would your mortgage—probably one of your biggest expenses—be any different?
Even a 0.5 percent interest rate difference can mean a huge increase in what you pay over the life of your loan. If your mortgage is $100,000 and you have a 30-year loan, you'll end up paying $10,214 more with a four-percent interest rate than you would with a 3.5 percent interest rate.
Before you start contacting lenders, make sure you understand the market and what kind of loan you want.
Give yourself two weeks for research
People who shop around for the lowest rate are more likely to be able to successfully pay their bills in full and on time.
Not only are they likely to have a smaller monthly payment, shopping around also show you’re more money conscious than someone who takes the first deal they’re offered.
That being said, credit bureaus expect you to shop around when you’re getting a mortgage. So if you do all your shopping within a fourteen day window, all of the hard inquiries on your credit will be counted as one.
Explore all your options
Take advantage of any current banking relationships you have, but look into other possibilities, too.
If you aren't a member of a credit union already, see if you're eligible to join one through your employer or another avenue. Because they save based on their not-for-profit status, they're often able to pass on savings to consumers in the form of lower interest rates and fees.
Make lenders compete for your business
If you have a good credit score, solid debt-to-income ratio, and down payment, then you’re exactly the type of person a mortgage lender wants to work with.
So don’t be afraid to tell your potential lender what other offers you’ve gotten. You might be able to use it to negotiate a better deal.
Ask your real estate agent for recommendations
Your real estate agent hears a lot about mortgages in their line of work. Ask them if they can recommend someone who other clients have been happy with.
The real estate agent and lender don’t work together, so you’re not getting any sort of guarantee—just a recommendation for someone who’s been helpful and trustworthy in the past.