Reply to First time buyer - help me understand how to “shop” for the best mortgage rate

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[quote=Anonymous][quote=Anonymous]I’ve learned a lot from these boards and are hoping folks can help me with this. We are buying our first home and have a short list of lenders from our realtor and friend’s referrals. We are leaning towards using a local lender (rather than a big national one) given how competitive the market is, the fact that we will need someone who can move really fast and do some hand holding, and the likelihood that we will need to waive all contingencies (gulp) so need to ensure an appraiser understands this area and will appraise appropriately.

I have spoken with one local lender so far who verbally told me what kind of loan we would get, the amount, and a ballpark percentage rate. The next step for us is to complete the preapproval.  I know we only need one of these and don’t want to get multiple pre approvals because of the hits to credit. Here’s where I’m a stuck - so now how do I “shop” rates and fees with other lenders? Lender one didn’t give us a specific percentage and said it would not lock until closing, which could be months away. They also haven’t provided a breakdown of their fees. It’s not clear to me if I should ask for this now, get this info after doing the preapproval, or if this doesn’t come up until we get a house under contract.

I understand that interest rates change daily, so how exactly do you shop around for your rate with a local lender (not a national one who has published rates)? When will a local lender give me an exact rate, or does that not happen until closing day? Do I just proceed with lender one and then once I get a house under contract should I make a few quick calls around to other lenders to see what terms they can offer? Does shopping around require all these folks to run credit checks?

Sorry if these are obvious questions, I am just finding it confusing to know how to approach this and when. [/quote]

You don't shop around until you're about to close on your house. Then you'll call 1-2 other lenders, answer a few questions, and ask them to email you a quote. You can use the quotes to negotiate with your current lender. Getting quotes doesn't require a credit check.[/quote]

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