Shopping for a loan may not sound as fun as shopping for clothes or a shiny new car, but you can save a lot of money over the life of your loan if you compare rates from several lenders. Here are some tips to keep in mind as you begin shopping around.
Gather all your information in advance
To give you a quote, a lender will need your basic contact information, employer verification contact, bank statements, pay stubs and Social Security number. Make sure you have everything you need at your fingertips before you call.
Contact potential lenders on the same day
Contacting several lenders on the same day has two big benefits. First, creditors will realize you’re shopping for rates, not applying for multiple loans, if they see that all credit queries were made at the same time. Second, mortgage rates change daily, so for an accurate comparison, you need to check them when all rates are being influenced by the same economic factors.
Be consistent with your facts for each lender
Ask each lender about the same type of loan for the same amount with the same down payment and loan terms so you’re comparing apples to apples when you look at rates. Even a small difference in what you’re asking for could change the rate you’re quoted.
Pay attention to fees
The annual percentage rate (APR) includes all fees as well as the interest rate, so it’s the most accurate figure for comparison purposes. Before filling out a mortgage application, it’s important to make note of the associated lender fees to get an accurate picture of the full cost. While lenders can’t change some fees or expenses, a few are negotiable. Explain that you’re comparing lenders to get the best rate and see what they can offer you to get your business.
Ask about how and when to lock your rate
Each lender may have a slightly different fee — or no additional fee — for locking in a mortgage rate, so it’s smart to ask about how that works. Once you’ve identified the best rate, you can lock it in for a set period of time. You won’t have to worry about rates rising. On the other hand, if rates decline, you may not benefit unless your lender offers you a float-down option, which allows your lender to offer a lower rate when available.
The information in this article is accurate as of the date of publishing.