MORTGAGE SHOPPING TIPS

FACTORS TO COMPARE WHEN YOU SHOP FOR A MORTGAGE

1. RATE. NEVER COMPARE A RATE IN ISOLATION. IT’S ALWAYS ..WHAT RATE..AND… WHAT ARE THE COSTS FOR THAT RATE! RATE ALONE MEANS NOTHING WITHOUT THE COSTS AND THE AMOUNT OF TIME FOR WHICH THE LOAN IS FIXED( A 5/1 IS NOT A 30 YEAR) YOU MUST COMPARE THE “SAME RATE TO THE SAME RATE”. MANY DON’T REALIZE THIS BUT A DIFFERENCE OF ONE EIGHTH(.125%) IN THE RATE CAN LEAD TO SIGNIFICANT DIFFERENCES IN CLOSING COSTS. AND THE LARGER THE SIZE OF THE LOAN THE MORE THE DIFFERENCE IN CLOSING COSTS. FOR EXAMPLE, CLOSING COSTS MAY DECREASE BY 1,000 DOLLARS OR MORE FOR JUST AN EIGHTH DIFFERENCE WHEN YOU REACH THE 200,000 MORTGAGE AMOUNT.
   
2. PREMIUM PRICING. THIS GOES ALONG WITH COMPARING THE SAME RATE. TYPICALLY, ADVOCATE OFFERS A 0 POINT AND 0 ORIGINATION RATE OPTION WITH WHAT ARE TERMED ORDINARY CLOSING COSTS. THIS RATE IS USUALLY .25% BELOW THE COMPETITION OFFERING A “NO POINT” OPTION. ADVOCATE CAN GIVE YOU THE HIGHER RATE OFFERED BY THE COMPETITION BUT DRAMATICALLY REDUCE THE CLOSING COSTS. AGAIN, IT’S IMPORTANT TO COMPARE THE CLOSING COSTS OFFERED FOR THE EXACT SAME RATE!!
   
3. LOAN AMOUNT. HERE SIZE MATTERS.THE HIGHER THE LOAN AMOUNT THE BETTER THE RATE/COST OPTION;
   
4. AMOUNT OF TIME OF THE “LOCK”. MORTGAGES ARE USUALLY PRICED IN 15,30,45,60,75 AND 90 DAY (OR MORE, WE CAN GO UP TO 180 DAYS) OPTIONS. THE SHORTER THE TIME NEEDED TO GUARANTEE THE RATE, THE BETTER THE PRICING. REMEMBER, THERE IS THE RATE AND THEN THERE IS THE PRICE(COST) FOR THAT RATE;
   
5. TYPE OF PRODUCT. SOME “ON LINE” COMPANIES OR COMPETITORS OF IN OUR OPINION QUESTIONABLE ETHICS MAY ADVERTISE RATES AND IN FINE PRINT SPELL OUT THAT THE RATE IS NOT A “FIXED” RATE OR THAT IT IS FOR A SHORTER TERM THAN 30 YEARS. BEWARE, LOOK FOR MANY COMPANIES WITHOUT THE BEST TERMS TO PUT IN BOLD PRINT A 5 YEAR ADJUSTABLE OR A 15 YEAR FIXED WITHOUT IN THE SAME SIZE PRINT INDICATING THE TYPE OF LOAN. IF YOU HAVE TO FIND THIS OUT, WHAT ELSE DO YOU HAVE TO UNCOVER?
   
6. MATCHING RATES. SOME COMPANIES OFFER TO MATCH RATES( NOT NECESSARILY CLOSING COSTS FOR THE SAME RATE). QUESTION, IF THEY CAN DO THAT, WHY DIDN’T THEY GIVE YOU THE BEST DEAL THEY HAD TO OFFER FROM THE BEGINNING INSTEAD OF MAKING YOU DO THE WORK TO FIND SOMEONE WILLING TO GIVE YOU THE BEST DEAL FROM THE START. WHAT ELSE AREN’T THEY TELLING YOU? WHY REWARD THE COMPANY THAT WAS MORE THAN HAPPY TO HAVE YOU PAY MORE THAN YOU HAD TO BY GIVING THEM THE BUSINESS AND NOT REWARDING THE COMPANY THAT BROUGHT THE SAVINGS TO THE TABLE. HERE’S A TIP. COMPARE AND TELL EACH COMPANY TO GIVE YOU THEIR BEST OFFER FROM THE START AND THAT YOU WILL BE PICKING THE BEST ONE FROM A VARIETY OF MAYBE 3-6 COMPANIES. BE CAREFUL TO COMPARE APPLES FOR APPLES.
   
7. DAILY RATE CHANGES. RATES DON’T THEMSELVES NECESSARILY MOVE ON A DAILY BASIS BUT THE COSTS FOR ANY PARTICULAR RATE CAN AND DO USUALLY MOVE WITH MORTGAGE MARKET CONDITIONS. THE MORTGAGE BACKED SECURITIES MARKET DOES MOVE SO IT IS IMPORTANT TO GET A CURRENT QUOTE ON THE DAY THAT YOU INTEND TO “LOCK IN”. THIS IS IMPORTANT BECAUSE YOU MAY FIND THAT A COMPANY OFFERS YOU THE SAME OR BETTER RATE THAN ADVOCATE A DAY OR TWO AFTER YOU RECEIVED OUR QUOTE, IT COULD BE THAT MARKET CONDTIONS HAVE CHANGED AND THAT OUR OFFERINGS ARE LESS THAN THE ORIGINAL. OF COURSE, TIMING IS IMPORTANT SINCE MARKET CONDITIONS COULD GET WORSE AS WELL AND COSTS COULD BE HIGHER EVEN A DAY OR TWO LATER.