How to do real comparison shopping for your mortgage and get great results
What is mortgage comparison shopping?
A lot of people think comparison shopping for a mortgage means looking at a mortgage chart of offers, like LendingTree or Zillow Mortgages.
The reality is, those aren’t real offers, those are ads. Only when you submit a mortgage application with your tax and financial information can you get an actual offer. Before that, it’s just estimates. And estimates aren’t binding.
Mortgage comparison shopping is when you pursue the mortgage process with multiple lenders, submitting all of your paperwork, and get real, binding offers to compare.
What are the benefits?
The benefits are truly impressive and well researched.
Comparison shopping for mortgages has been shown to produce major savings. This report from the federal Consumer Financial Protection Bureau shows some interesting facts:
People who successfully comparison shop save 0.25% on their interest rate which translates to thousands of dollars of savings over the course of your mortgage. To give you an idea, on a mortgage of $400,000, you’d save about $3,500 on just the first five years of your mortgage.
And, that’s not even including the savings you’d get from comparing lender fees and other costs like insurance.
How many people actually do it?
75% of home buyers actually pursue getting binding offers from more than one lender. Shocking. So, why do so few people do it, especially if comparison shopping is so powerful?
It’s time consuming and takes extra effort.
Lenders have different requirements for documents and different timing for processing and requesting more information. The paperwork that a borrower must provide can be different for each lender, making the process time consuming. Different lenders also progress at different paces, depending on how busy they are, making it hard to manage.
Many people who start out meaning to comparison shop simply end up with only one lender.
And that approach leaves you with no negotiation power.
How you can succeed at mortgage comparison shopping and save thousands
A good way to succeed at comparison shopping for mortgages is to find at least three mortgage lenders, preferably four, who are able to get you a mortgage, given your particular profile. One key is getting organized before you start shopping, pulling all of your documentation together so that you don’t have to scramble.
Next, you want to apply for a mortgage at the same time so you can get real, binding offers to compare.
Finally, you will want to do some analyses on the long term costs of each option, not just comparing interest rates. Mortgages have many components, lender fees, appraisal fees, sometimes insurance costs, and some up front costs. In order to compare each offer effectively, you’ll need to calculate out the costs for each loan overall and over time.
A solution that makes it easy for you to comparison shop, save thousands and cut the time it takes to get a mortgage in half
Finding your best offer, saving thousands and cutting the time it takes a mortgage in half is why we developed Instant Mortgage Genius. We lead you through the ultimate process step-by-step so you can reap the rewards of lower mortgage costs and massive time savings, while we do the heavy lifting.