Be wary of lies you might hear when buying a home, especially if you’re a first-time homebuyer. Try and leave it to us experts to guide you in the right direction, and don’t be afraid to ask questions!
Is That Rate Right?
When you get an estimate, one of the first things you’ll naturally look at is what the rate is. But how do you know if it’s a good rate?
Rates quoted in the media are like trending reels on Instagram: often too generic and...old news. In contrast, rates online are like classic catfishing: they get your attention but...the reality is disappointing.
So how do you know if you’re getting a good deal? You get a second opinion from someone you trust.
There are over a dozen data points that impact the rate you’re quoted. Take the time to have a real conversation and provide enough info to get at least two quotes (on the same day).
If the estimates aren’t detailed, or if you got a quote with minimal details, the lender just wants you to accept it, no questions asked. You deserve better than that!
Local Lender is Best
You might not agree with me, but I’m going to say it anyway. Choosing a “local lender” is overrated. Here’s why I think this.
When someone recommends that you “use a local lender” they just mean, “use a lender who knows what they’re doing.” This means someone who understands the purchase contract used in that area, knows how much taxes and title fees usually are, and is aware of any local quirks when it comes to insurance or mortgage guidelines.
Of course, I completely agree with that sentiment, which is one that realtors often use. But lenders aren’t realtors. Our skill sets aren’t as tied to geography, so we don’t have to physically be part of your buying process; most everything we do is done digitally or virtually. We aren’t limited to certain cities or countries, and you can have an excellent experience with someone several states away.
With that being said, it’s also a bit of a “stranger danger” warning. Basically, if I don’t live near them, how can my buyer trust me? I get this, 100%. Buying a home is a very big deal. You don’t want someone with limited knowledge directing your financial decisions, or someone who may or may not have your best interests at heart.
However, you can trust word of mouth, whether it’s from family, friends, or even a Google review. You can trust your intuition based on the service you receive and the conversations you have. So, no. Local isn’t always better. But experience and expertise are.
How You Should Shop Your Loan
“You should shop your loan.”
Everybody says this. I say this. But what does it actually mean? How do you even do it?
There are two parts of effectively comparing your mortgage options – AKA shopping your loan. The first is the easy part – comparing rates and fees. When it comes down to it, there are only a handful of things that your lender choice affects, and most of what you’ll pay to buy a home is the same regardless of the lender you choose.
Affected by Lender Choice
Discount Points/Lender Credits
Appraisal and Credit Report
Other Data Validation Services
Not Affected by Lender Choice
The second part is harder, but just as important. Deciding which lender you can trust and who has the necessary knowledge and experience to walk you through the process takes a little longer than comparing rates and fees.
Everyone wants a great deal with excellent service and expert advice. When you’re shopping around for a loan, take the time to find someone who can balance all three for your benefit. Check their reviews. Have several conversations. Get comfortable with them and their approach.
At the end of the day, buying a home is a big deal. Simply focusing on rates and fees and choosing the cheapest option could be an expensive mistake. Reach out to experts (like me!) for specific questions and advice!