I have decided that the phrase “shopping mortgage rates” is an oxymoron. There is no such thing. A mortgage rate is a mortgage rate is a mortgage rate. What you are actually shopping is truth. I will skip the dishonest mortgage broker rant here and cut to the chase.
NOTE: Carve out some time to call all of these brokers on the same day.
1. Ask friend near your home or office if they know a decent mortgage broker. Get 3 names.
2. Call brokers.
3. Be pleasant and professional. These are generally nice hardworking people and deserve respect.
4. Tell him/her the amount of the mortgage, downpayment if purchase, estimated value of home and term you want (1, 3, 5, 7, 10, 15, 20, 30, 40 years) . Be prepared to give him/her recent credit scores for the borrower/co-borrower.
5. Once that information has been delivered simply ask “From all of your wholesale sources please tell me the lowest par rate you can lock my loan at today?” Also mention that you want to be fair and let them know you are calling 2 other brokers but you are asking the same question.(At this point they may feel compelled to ask you what rates you have so far and may attempt to sell against the others - cut them off and tell them you are keeping all rates confidential and will do the same with their rate.)
6. Ask broker if there are any discount points priced into the rate.If answer is yes then go back to Step 5 and stress PAR RATE.If answer is no then ask to confirm the wholesaler lender’s name. Write it down and the rate quoted next to the broker’s name.
7. Go back to Step 2 and repeat until you have 3 par rates.
8. When you are done you should have 3 VERY similar rates. Wholesale loan rates reflect a commodity - the time value of money on a certain day. If 2 of the rates are close and 1 is much higher - throw that rate out.
9. Now take the lowest 2 rates and call each back to confirm the rate. Also ask them to email or fax you the rate and the wholesale lender name confirming this is “the lowest par rate you can lock my loan at today”. If they refuse to do this then scratch them from the list.
Step 10. Once you have a winner (lowest rate or person you prefer if rates are same) then call them tell them you would like to buy a mortgage for ___ rate for a term of _____ and there will not be any origination fees or junk fees but you would be willing to pay them a flat fee of $1,500 for their time and expertise. Also promise them you will not further shop the loan and you will not respond to all the phone solicitations you will receive once they run your credit (these phone calls are from unethical loan officers that buy trigger leads from the unethical credit bureaus that sell them - you become a trigger lead when you have your credit pulled by a mortgage broker or bank. (Make sure your loan officer DOES NOT provide your email or phone number when they pull your credit.)
If they agree then you buy the mortgage if not go back to Step 1. They won’t like this method as mortgage brokers love to control the information flow. Some may even tell you this is not legal. Hogwash. Again move on you will eventually find someone honest enough that would rather make $1,500 for performing a service than play games in an attempt to make $4,500.
Good luck and be strong.