2,000 Reasons To Comparison Shop A Mortgage
Freddie Mac research shows how much money mortgage borrowers save by comparison shopping their home loans; today’s updated mortgage rates for conforming, USDA, VA, jumbo, and FHA loans; why your lender asks for paperwork and what to do when you don’t want to send it in.
You’ll Save $2,000 When You Talk To Two Or More Lenders
Comparison shop with multiple mortgage lenders. You’ll save money.
A new study from Freddie Mac shows home buyers could save $2,000 on their mortgage by getting a competing quote from a second lender; and, save even more by talking to a third, fourth, or fifth mortgage lender.
The data comes from the Freddie Mac’s research arm and is based on an analysis of twenty-two years of mortgage rate surveys conducted by the group, with weekly updates from close to 125 mortgage lenders nationwide.
Consumers could get lucky, the study acknowledges, and get the best mortgage rate of the day on their very first call. But, what’s more likely, Freddie Mac shows, is that consumers talking to multiple lenders get access to a wider range of interest rates, which can mean access a lower one.
Freddie Mac’s analysis shows the following savings at the maximum end of the chart:
|Number of Lenders||How Much You'll Save|
|Shop With 2 Lenders||Save $2,000|
|Shop With 3 Lenders||Save $2,900|
|Shop With 4 Lenders||Save $3,500|
|Shop With 5 Lenders||Save $3,900|
This Freddie Mac report is not at all surprising. As consumer, we know that comparison shopping works and that it’s smart to make sure we get a good price.
But, here’s the thing with mortgages: People don’t shop for them.
A recent government study showed 77 percent of people in need a mortgage never comparison shop at all; they get their first rate quote and they stick with it.
That’s not the shocking part.
The study also asked people to rate their knowledge of how mortgages work and, from that, researchers found a positive link between a person’s knowledge of mortgages and their willingness to comparison shop their home loan.
Now, flip that around: the less you know about mortgages, the less likely you are to shop around; and, that’s unfortunate because all buyers deserve the best mortgage rate possible, and the best loan to meet their needs.
And for that, it’s best to talk with two or more lenders.
Today’s Mortgage Rates & Trends
Mortgage rates are improving into the weekend.
For today’s home buyers, the answer to “How Much Home Can I Afford?” is improving; and, for homeowners in the money to refinance, monthly savings are on the rise.
Today’s rates are moving like this:
- Conforming mortgages: Lower
- FHA mortgages: Lower
- VA mortgages: Lower
- USDA mortgages: Lower
- Jumbo mortgages: Lower
For an actual mortgage rate quote, you’ll want to talk with a lender. Pricing varies by person based on loan size, credit score, and state of residence.
How you choose to pay your loan closing costs matters, too. Borrowers who pay discount points and a full set of fees get access to lower rates than borrowers who do low-cost and zero-closing cost loans.
Ask your lender which closing cost path is best for you and make sure to talk with two or more lenders to find your preferred combination of rate, costs, and service levels.
Get Today’s Mortgage Rates
Mortgage Lenders Don’t Request Unnecessary Documentation
Getting a mortgage approved requires documentation. Embrace it.
When mortgage lenders make loan approvals, they follow checklists known as mortgage guidelines.
Mortgage guidelines are thick — when they’re printed, they can span 1,800 pages — and they cover every aspect of your mortgage approval.
Guidelines define minimum allowable credit scores, maximum allowable loan sizes, and maximum acreage of a property, as examples.
They also dictate the types of verifications a lender might require.
Common verifications include income verification using pay stubs and tax returns; asset verification using bank and investment account statements; and home value verification, which is accomplished via a home appraisal.
Not all loans require the full set of verifications.
The FHA Streamline Refinance requires almost no verifications whatsoever and some loans waive property appraisals, as examples. And, when verifications aren’t required, lenders do do them.
That’s why borrowers should respond quickly when lenders make verification requests. Lenders don’t ask for paperwork they don’t need and taking too long to reply can jeopardize your mortgage rate lock and your closing date.
Documentation requests can seem cumbersome and superfluous at times, but lenders don’t request paperwork they don’t need to approve your loan. Their requests are governed by mortgage guidelines.
A lender’s just checking boxes to get you the loan you need.