Why It Pays To Shop
At any given time, people are out there looking to purchase
a home and get a principal mortgage to finance this purchase.
Choosing the right mortgage from the lender who offers the
best terms is imperative.
Still, some people believe it isn’t worth it to shop
and compare lenders when engaging in such a large purchase.
They think that since rates are set by the market, there won’t
be enough difference in lenders to justify their investment
of time in shopping.
However, this is certainly not the case. Lenders vary greatly
in the terms they require, and sometimes the variance may
not be upfront and obvious. One of the ways to see this is
comparing fees from different lenders, based on a loan with
the same rate and term. For example, in 1998, when shopping
for a 30-year loan at seven percent interest in Oregon, one
shopper found a variety of fees with ten different lenders.
The fees were called different things – points, origination
fees, processing fees, etc. However, in the end, the median
fee was $5034. The lowest quote was $1700 below the median,
and $3100 below the highest quote. This is a substantial savings
in return for your investment of time in shopping.
The potential shopping savings only increases when the market
is volatile. When rates are changing rapidly, different lenders
have very different reactions. There is an increased chance
that the rate quoted will be substantially lower with one
lender than another at such a time.
If you are still concerned about the amount of time it will
take to shop and getting the most out of the time you spend
finding a good deal, you might think about shopping online.
The Internet offers a way to get lots of quotes to compare
without leaving the comfort of your own home, a surefire shopping
strategy to save both time and money.