It Pays to Shop for a Mortgage Loan, Even in Today’s Crazy Market

It Pays to Shop for a Mortgage Loan, Even in Today's Crazy Market

While it’s getting more expensive to buy a home (mortgage rates haven’t stopped making the news, home prices haven’t fallen as much as many would like, and whispers of recession can still be heard), there is some good news for home buyers: The dispersion of rates has increased, meaning prospective buyers can shop around for a better rate.

According to MarketWatch’s Aarthi Swarminithan, getting just one additional quote can save you on average $1,500 over the life of a loan — perhaps even $3,000 if you get five rate quotes. Don’t feel strange about shopping rates as well as loan programs, going from lender to lender to see where your best “fit” exists— the good ones expect you to. Your credit score plays a big role in determining the interest rate you’ll be offered. The higher your score, the lower your interest rate will be. Once you have your score, you can start shopping around for loans. And remember — not all lenders are created equal; some will offer you better terms than others. Compare offers from a variety of lenders before making a decision.

While you’re at it, don’t forget to pay attention to both the interest rate and any associated fees. Some lenders may impose origination costs or prepayment penalties, for instance. Be cautious to account for these costs in your decision-making process because they can mount up.

Depending on the part of the country you live in, even at today’s rates, renting a home or an apartment costs more per month than a mortgage payment would. When you factor in the additional costs of rent (like utilities and internet), the difference can be even greater. Consult with your Realtor on this one, as they have their finger on the pulse of the current market.

MarketWatch, TBWS