Power Shopping for a Home Loan
by Craig Goebbel
President & CEO, LoanTek, Inc.

Today I want to address the task of shopping for a home loan. This process need not be daunting nor time consuming. More important, with careful shopping your biggest fear about mortgage shopping - getting shafted - can be easily avoided.

Rule Number One: Get a referral from a trusted Realtor, financial advisor or friend.

Their good lender experience along with their referral are the best predictors of a good outcome.

Rule Number Two: Shop at least three lenders.

By shopping you will accomplish several important steps. The most important is determining what type of loan you need and/or want. With today’s rates, usually the choice is easy - a 30 or 15 year fixed rate loan. Second, you need to develop confidence that you know what all of the fees associated with your transaction mean and why they are necessary. Initially, loan shopping (whether online or by the phone) can be very confusing but you should quickly learn what you need to know and ask. Even with a referral you need to get a written estimate so you can compare quotes. This is the only guaranteed way to get a good rate at a fair price.

Rule Number Three: Follow the “Rule of Same.”

Ask each lender for a written quote that discloses every fee, point, charge, cost and credit associated with your transaction, based on the same loan type, the same loan amount, the same interest rate, the same rate lock guarantee (ask for 30 days) on the same day.

Rule Number Four: Do the math.

Your last step is to sit down with each quote, eliminate the costs of interim (or per diem) interest, property taxes, homeowners insurance and mortgage insurance. The lender with the lowest cost after these adjustments is the least expensive. If the differences are too close to care about, then stick with the referred lender. If the differences are significant to you, then give the referred lender a last chance to earn your business. If a non-referred lender is the winner, then ask them for references from recent transactions.

© 1999 - 2004 LoanTek

Craig Goebbel is President and CEO of LoanTek.com, mortgage loan brokerage.  He is also producer and host of Real Estate Radio Show, a Seattle-based talk show featuring mortgage and real estate news, interviews and listener calls. It is broadcast on KVI Radio AM 570 in Seattle, Washington. Past show are also webcast via the Internet at http://www.realestateradio.net.

Real Estate Radio Sponsor

Real Estate Radio with Goebbel and Gray is the leading real estate radio talk show in the world and is hosted by Real Estate home mortgage expert Craig Goebbel, owner of LoanTek Home Loans and Robb Gray of John L. Scott Real Estate.