Reply to Stupid First Time Home Buyer Question About Lenders

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I'm sure this is a very stupid question.  I have two pre-approval letters from two different lenders.  My agent and I are actively home shopping.  What is the best way for me to get the best deal?  If I submit one letter with my offer, do I have to stick with that lender should something better come along?  [/quote]

My suggestion to approach this, for you and others. Find a mortgage broker you like. Get pre-approved with them. Then get your house under contract.

Once the house is under contract, go back to your original mortgage broker. Ask them for their best price. Take that to 3-4 (or more) other mortgage brokers. Say your prior approval person (we'll call broker A) gives you 3.5 with zero points. Go to mortgage broker B, say, "I have 3.5. Can you beat it?" If broker B says no, then go to C. If broker B says "yes, I can do 3.375," then take that to broker C, and ask to beat 3.375. Repeat until you are sure you have the lowest price.

Then, go back to broker A and say "I've been offered X. Can you match?" If they can match, stick with the person you liked at the outset and did your pre-approval. If they can't match, go with whoever gave you the cheapest price.

There is a lot of play in these markets. Brokers make money on consumers who don't do their homework to figure out the cheapest price. You have to be aggressive in negotiating down if you want the best deal. Remember, few brokers will ever give you the best price unless they know they have to in order to get your business. Why would they leave money on the table? Just the same way, you shouldn't overspend. So take the time, and you'll save thousands and thousands over the life of your mortgage. [/quote]

There is more to choosing a lender than rate. A national lender with a poor reputation for closing on time isn’t worth it if it offers an eighth of a point lower.[/quote]

To the extent that there is any doubt about whether a particular lender can close on time, you can almost always leverage your lowest rate into a match by someone else. Through hard work, most buyers can save 1/4 point, perhaps 3/8. Perhaps 1/4 with some lender credits. Too few buyers actually do their homework, and they wind up with whatever lender pre-qualified them at whatever price that lender tells them. Great for the lender--and an overpay by the buyer. [/quote]

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