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Should you shop lenders for the best interest rate?
With rates rising, we're getting asked this question a lot these days. The quick answer is well, of course, you should. The reality is though there's way more to it than this.
What good is your rate if your loan doesn't close, right?!
In keeping with this, if you're going to shop lenders and interest rates, you need to know what to look out for and how to do it the right way.
First things first because it's critical..., it is paramount that you do not visit and rely on information on those websites that advertise ‘ the national average is.' Here's why; you are an individual, and you are NOT an average. As an individual, you have your credit score, credit history, income, assets, and a loan scenario that's specific to YOU. It is impossible to provide an accurate rate quote until you've talked to your lender and have provided to them all of the information and documentation they need to determine your credit profile.
Second, when shopping lenders you must be very clear about what it is you're looking to achieve. For example, some people want a rate quote that comes with zero fees to obtain it. Other people want the best rate they can get, and they're willing to pay ‘x' amount of dollars to get that rate. When comparing rates quotes from one lender to another, there's no way you can make an apples-to-apples comparison and determine which offer is the best one unless you've been clear with both of them what your goals are.
Third, if any lender quotes you an interest rate before you have provided them your credit pull authorization, your current paystubs, W2's, bank statements, etc.., you need to be aware that you're already in big trouble. If this happens, you need to immediately duck and cover and pole vault away from that lender as fast as you can. Starting a loan transaction this way guarantees it's not going to end on a positive note. Save yourself the needless drama and find another lender straight away.
Finally, LISTEN TO YOUR REALTOR. If your Realtor refers you to a local lender, it is because he/she has had many positive experiences with that lender. Realtors know that professionalism, accessibility, open communication and your loan closing on time as scheduled is the most important thing needed to have a smooth loan process.
In summary, when shopping for rates, you must realize that there are multiple things to consider. Once again, remember that the excellent rate quoted to you doesn't mean a darn thing if your lender can't get your loan closed.
If you're going to shop lender, please do, but be sure you're doing it the right way. And don't forget to get that referral from your Realtor to a local, reputable lender..., you'll be glad you did!
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