First, do the research yourself. If you can trust a mortgage broker to sniff out the best terms, think again! Whatever savings they finagle will soon be lost as the broker fees pile up. The Department of Housing and Urban Development (HUD) studied the price of loans secured through a broker and those secured by the home buyers themselves. Those who used a broker typically paid 27% more in loan fees than those who did the work themselves.
So how do you find the most competitive rates without the help of a broker? The Internet is a valuable tool for comparison shopping of all stripes. Comparing mortgages is no different. Go online and do a search for “compare mortgage rates”. You’ll find numerous mortgage loan calculators and rate comparison charts that show you the current rates being offered in your area.
Once you’ve generated a list, compare each lender’s annual percentage rate (or APR). The APR is the most accurate measure of the loan’s full cost. Choose several good offers and print out your list for further scrutiny.
Now it’s time to eliminate the loans that aren’t up to par. Is there a mortgage that requires higher up-front fees than the others? Scratch it off your list. Look for fixed-rate mortgages so that you can keep the same interest rate throughout the life of your loan. If you’re looking at adjustable-rate mortgages, look at the rate caps to see how far and how fast your interest rate could rise.
When you’ve whittled your list down to three candidates, send in your mortgage loan application to those three lenders. You can apply to all three on the same day, usually for free. They’ll respond with good-faith estimates, and you will have better data to compare. These days lenders even use Clear to Close Meme when the loan is at the finishing stage. The lender with the lowest price wins!
See? That was a fairly painless way to shave up to 27% off of the cost of your home loan. And when you’re trying to get rich slowly, every little bit counts.
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