How to shop for a mortgage?

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Noob here

Normally I'd just go around pitting each broker against each other looking for the best rate. Similar to what I do to dealers when I shop for a car.

But I hear about brokers doing some 'illegal' and 'predatory' things.

I dont know what that is about.

What are some things to avoid? Any recommendations?
 
Ahh the eternal question, ranking not far below "What should I have for dinner", and "Do blonds really have more fun?" All kidding aside... here's what I suggest.

First - Get your own house in order. What do I mean by that? Get your documentation together first. All lenders will need 2 years Federal Tax returns, plus W-2's, 30 complete days of pay stubs, and two months complete bank statements. Lenders cannot use internet banking summaries or printouts that don't show the complete account number or your name. Sad but true, we have to have the paper bank statement. There are thousands of other items needed but this is a good starting point. Why do this first? If you want a deliverable rate, you have to have your own documentation in order to get an accurate quote. I can't tell you how often people will say "I got quoted a 4.5% rate, then things went bust-o during the process because my (income / assets) didn't pan out". Anyone can quote a number in a dog fight for your business, but that does not make it a real, deliverable rate. As it's been said, Chance favors the prepared mind. Be that person.

Second - Never, ever shop rates. Most reputable loan officers are within .125% in rate and about $500 in fee when you finally get to the closing table. Let's say you found the mythical "best rate and lowest fee", yet your process was so terrible you nearly killed yourself mid stream. Was it worth it? Another way to look at it - you find a $500 lower fee for the same rate, yet you text'd, emailed, called and hounded your LO so much so that when you open your Verizon bill the next month, you're $500 in the hole AND BONUS... you got ulcers in the process. Finally, the average lifespan of a rate quote is 3 hours and 15 min. Rates change that often. You again might find "the best rate and lowest fee" after calling around, yet once you make your decision the rates have turned and you don't get the deal. Where does that leave you? Not in a very good position. The bottom line - Shop the loan professional and never the terms. The loan professional who is well recommended will be market competitive and won't screw around. That's why they are still in the biz while most mortgage douche bags have been swept out with the tide. Yes, I said douche bags. Apologies in advance if anyone takes offense, but I got to call'em as I seez'em.

Third - Ask around. Most people who closed recently will have pro's and con's to say about their lender. A friends recommendation on who did the best job will take you much farther down the road than a recommendation based on price alone. There are some top producers in Orange County - Tina Vo at Wells Fargo (Westminster), Kevin Budde at Countrywide (Laguna Niguel) and others who have helped 1,000's of clients successful while still being price competitive. They are the McDonalds of mortgage producers, fast and relatively cheap. Not everyone likes to eat at McDonalds however. If your circumstances are such that you need more finesse in structuring a loan, your accountant or trusted financial advisor will likely have a name of someone for you. Certainly IR and this board can come up with a few names.

Hope this helps.

My .02

Soylent Green Is People.
 
If you use Bankrate, please be aware that the rates shown do not reflect accurate terms. The lowest cost provider (in this run...they change by the moment...) had a 4.875% 1.0 point 30 year fixed conforming rate. I went to their site and input the same data on their instant rate quote page, but it gave 4.875% for 1.625 points as the charge - which is pretty close to market. Imagine sifting through this with all of Bankrates advertisers....

I suggest looking at the average Fannie Mae, Freddie Mac, or Mortgage Bankers Associations weekly rate survey. Even those sources are about .125 in rate or $500 in fee off from what a mortgage professional can offer you. At least these resources are "ad-free" and somewhat more reliable indicators of the direction of rates.

My .02

Soylent Green Is People.
 
I suggest a PM to Soylent, he's not advertising for himself here, but very obviously knows what he (she?) is doing.
 
Soylent Green Is People said:
If you use Bankrate, please be aware that the rates shown do not reflect accurate terms. The lowest cost provider (in this run...they change by the moment...) had a 4.875% 1.0 point 30 year fixed conforming rate. I went to their site and input the same data on their instant rate quote page, but it gave 4.875% for 1.625 points as the charge - which is pretty close to market. Imagine sifting through this with all of Bankrates advertisers....

I suggest looking at the average Fannie Mae, Freddie Mac, or Mortgage Bankers Associations weekly rate survey. Even those sources are about .125 in rate or $500 in fee off from what a mortgage professional can offer you. At least these resources are "ad-free" and somewhat more reliable indicators of the direction of rates.

My .02

Soylent Green Is People.
Click to expand...

Soylent,, do you recommend going directly with a bank or with a broker?
 
There are great broker shops and great banks. The key is who at these lenders will treat you right. I know several good people at Bank of America/Countrywide (they will never lose that name btw...) and Wells Fargo. From the sound of things very few people have good things to say about either company but much of their grousing falls squarely on the LO, not the company. Brokers for the most part are problematic but some good shops still are around - Loan Link Financial Services is a good broker/banker for example. An earlier post mentioned Park Place Funding. Not to pick on them, but companies like PPF ran ads touting their 1% rate solution during the Option ARM frenzy, then a year later claimed they avoided these kinds of products and sold only good "family friendly loans". Most broker shops like this are destined to collapse (Greenlight, QLF etc.) so avoid getting sucked into their vortex of fail by chasing what appears to be a great rate.

The best rule of thumb, of which there are many exceptions, is finding someone who has been in the business from the early 1990's on. Sorry, newbies but hopefully you will count as an exception.... Most LO's who started in the 90's survived the last down turn, went through two significant refi booms, and still remain in the business to this day despite all odds. That kind of experience is worth paying for.

Can you get a better deal elsewhere? Of course. You can also get low priced legal advice, low cost tax preparation services, discount food and goods. The question is are you really saving all that much overall versus what you paid in the short run?

My .02c

Remember: Tuesday is Soylent Green Day!
 
Soylent Green Is People said:
Remember: Tuesday is Soylent Green Day!
Click to expand...

Is that like Taco Tuesday?

soylent_green-749218.gif
 
Soylent Green Is People said:
There are great broker shops and great banks. The key is who at these lenders will treat you right. I know several good people at Bank of America/Countrywide (they will never lose that name btw...) and Wells Fargo. From the sound of things very few people have good things to say about either company but much of their grousing falls squarely on the LO, not the company. Brokers for the most part are problematic but some good shops still are around - Loan Link Financial Services is a good broker/banker for example. An earlier post mentioned Park Place Funding. Not to pick on them, but companies like PPF ran ads touting their 1% rate solution during the Option ARM frenzy, then a year later claimed they avoided these kinds of products and sold only good "family friendly loans". Most broker shops like this are destined to collapse (Greenlight, QLF etc.) so avoid getting sucked into their vortex of fail by chasing what appears to be a great rate.

The best rule of thumb, of which there are many exceptions, is finding someone who has been in the business from the early 1990's on. Sorry, newbies but hopefully you will count as an exception.... Most LO's who started in the 90's survived the last down turn, went through two significant refi booms, and still remain in the business to this day despite all odds. That kind of experience is worth paying for.

Can you get a better deal elsewhere? Of course. You can also get low priced legal advice, low cost tax preparation services, discount food and goods. The question is are you really saving all that much overall versus what you paid in the short run?

My .02c

Remember: Tuesday is Soylent Green Day!
Click to expand...
Very well put. It all depends on the loan officer. The best way to find a go loan officer (either at a broker or direct lender) is from referrals from friends or family who have first hand experience. I knew a guy at Countrywide who was very good (in the business since the 80s) but I'm not sure if he is still around. He wasn't the absolute lowest priced but boy was he on top of things and he would always letting me know where I was in the process.
 
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