How to shop mortgage rates

Question

Banks, lenders and brokers use SAME information quoting rates so if you know what they need to calculate rates you'll get quick accurate quotes.  This makes calling around MUCH easier.  Here's what you'll need to know before calling;

1.   Loan program you want quoted (FHA, VA, Conventional, Jumbo)

2.   Type of loan (Purchase, Refinance or Cash-out Refinance)

3.   Term you want (30yr Fixed, 5yr ARM, etc)

4.   Property Type (SFR, Condo, 2 unit, 3 unit, 4 unit)

5.   Occupancy (primary, second home, investment property)

6.   Loan Amount (how much you want to borrow)

7.   Property value (approximation or sales price is ok)

8.   FICO Score (if you know all three ALL lenders use middle FICO, not average)

9.   Impounds (do you want taxes and insurance billed with your mortgage statement)

10. Lock period (15, 30, 45, 60 day)

Keep things simple when getting a quote follow 1 & 2 below:

1. Stick with asking for a "no point rate" keeps things simple. You can fine tune things later.

2. Get lender fees (underwriting, processing, appraisal.  NOT 3rd party fees like escrow, title, transfer tax, etc) Most will be $995 - $1,495.

Ed Wood · Answer

I can't remember how to do the @name thing so hopefully you get this reply.

You're being taken advantage, of lenders do not need to pull credit to quote you a rate.  With the above list of items and they 100% for sure have enough information to quote you a rate.

Stephanie Medellin · Answer

@Ed Wood  This is a great suggestion, and easy way for consumers to quickly shop around.  With the list of parameters you posted it would take me about 2 minutes to compare rates among 50 lenders.

I would add that if you want a true comparison, it's really important to call all the lenders you're comparing on the same day, since pricing changes from day to day.  While the interest rate may remain the same, a 4% at 0 points today may cost .25%, or 1/4 point tomorrow.

Georges A. · Answer

@Ed Wood Great topic! Thanks for putting the time.

This might sound as a silly question but the mortgage part of investing is def an area that I need to improve on. When you're mortgage shopping are you constantly running your credit (probably within the 10 days window as they all count as one and won't hurt as much) or are you simply making phone calls and getting these answers without a hard credit pull?

thanks

Ed Wood · Answer

@Bill Gulley

I wish all lenders would work off the same page until the feds get this area tighened up and maybe that will be Jan 10, 2014.  Mortgage APR should include all settlement costs that would come up in an all-cash transaction leaving some items open to lender interpretation.  Here are a few items some lenders do not include in the APR while others will include in the APR.

Appraisal Fee
	Appraisal Update/Completion Report
	Credit Report Fee
	Lender's Title Insurance Fee
	Notary
	Abstract & Attorney Opinion Fee
	Early Issue Title Insurance Fee
	Lien Search
	Mortgage Certification
	Municipal Lien Certificate Fee
	Name Search
	Plot Plan/Plat/Survey Search Fee
	Title Endorsement(s) Fees
	Title Enforcement Fee
	Title Search/Exam/Abstract
	Termite/Pest Inspection
	Recording Fee

Ed Wood · Answer

Lenders only need to produce a GFE if you provide all 6 of these items below.  More than likely you're just shopping rate and don't want to do a "mini-application" and want to stay somewhat anonymous and in control of the conversation.  In this tread I wanted to empower people to have the necessary information so they can request a accurate rate and just the lenders fees.

6 required items to produce a GFE

1. Borrower’s Name

2. Borrower’s Income

3. Property Address

4. Property Value

5. Loan Amount Wanted

6. Buyer’s Social Security Number

Pete T. · Answer

Good faith estimate is required to have the APR, interest rate, etc.

Bill Gulley · Answer

If they do, they aren't in compliance, APR is dictate under the TILA so they all need to be on the same page. The differences are more likely to junk fees related to the loan than questionable closing costs as all direct loan costs are required to be included. However, you do need to ensure everyone is working off the same loan amount and LTV, otherwise you'll have PMI kicking in jacking the APR up. MAke sure it's apples and apples. :)

Ed Wood · Answer

@Bill Gulley

I agree APR is a the best way and is supposed to be the perfect method IF all lenders used the same calculations in creating the APR.  You might have one lender that will give you the APR with title as a APR item because they're in "over-compliance-mode" and they may have the best deal but the other lender  doesn't put title as a APR item so their APR looks lower.  In my opinion this is why I prefer asking what the lenders only fees are leaving out the 3rd party fees like title, escrow, etc.

Bill Gulley · Answer

Good points Ed. With that information given ask for the APR. That will take into consideration origination fees and any discount points at different note rate offered. :)