It’s Hard to Compare Apples to Apples
But shopping for a mortgage is not like shopping for any other commodity. A 30-year fixed loan from one lender is not like a 30-year fixed loan from another lender. It may seem like you’re comparing apples to apples, but you’re not.
That’s because there is so much that goes into determining the rate of interest and all of the different fees that are part of a loan. Oftentimes people will call us up wanting to know what the rate is and what the fees are so they can compare that with something they heard from another lender. But there’s a whole breakdown behind that quote that they don’t know about.
Tricks of the Trade
One of the tricks lenders will play is they will lower the estimate of property taxes or homeowner’s insurance, just to make the payments look more attractive to the person on the other end of the phone. But they aren’t responsible for the property taxes or the homeowner’s insurance.
Property taxes, homeowner’s insurance, and other fees that lenders quote are for services provided by third parties, and they can vary from location to location. Unscrupulous lenders can estimate whatever they like; the borrower will find out the true cost on closing day. (For more on this trick, see my post “What’s Wrong with Online Lenders?”)
Dig a Little Deeper
When checking around with different mortgage lenders, there’s more to ask about than just rates and fees. You want to know how the lender is going to handle the whole loan process. You want to how they advise their clients about which programs best suit their needs. You want to know how transparent their process is. You want to know how they try to ensure the accuracy of their fees and rates. You want to know whether they’ll get the sales contract extended if you need it. You want to know whether they’ll close on time.
They only real way to get this information is to go with a reputable lender who knows their local market well.
The Importance of On-time Closing
Reputable local lenders that are transparent and have your best interests at heart will save you on more than just fees and interest rates. Take on-time closing. There are real costs associated with closing late — it’s not just a matter of timeline. What if all of your worldly belongings have to sit on a truck for a few days? What if you and your family have to stay in a hotel for a few days or weeks because the lender didn’t close when they promised to?
The costs for your things to sit on a truck, you to rent a hotel room, and your family to eat out every meal are going to add up quickly.
Cars vs. Mortgages
Say you’re looking at cars. What’s the difference between a brand-new car from this dealer and a brand-new car from that dealer, of the same make and model? Well, if one of those brand new cars had to be shipped from Venezuela, that changes things a little bit. At that point, it’s more than just price. It’s how you obtain that car.
Of course, that scenario doesn’t usually come up when you’re car shopping. It does in the mortgage industry, though. How you obtain that loan is the biggest difference between lenders.
If you have questions about interest rates, fees, or anything else to do with home financing, hit us up. You can call 205–986–4220, connect with us on social media, or ping our website. We are happy to help you in any way we can.
— Ben Chenault,
Certified Mortgage Planner
MortgageBanc / Fairway Nmls# 2289
Copyright©2019 Fairway Independent Mortgage Corporation doing business as MortgageBanc. NMLS#2289.4750 S. Biltmore Lane, Madison, WI 53718, 1–866–912–4800. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License No 41DBO-78367. Licensed by the Department of Business Oversight under the California Finance Lenders Law, NMLS #2289. Loans made or arranged pursuant to a California Residential Mortgage Lending Act License. Georgia Residential Mortgage Licensee #21158. Licensed Nevada Mortgage Lender.