Comparing Mortgage Rates/Companies

[stein79]

Hello friends,

I'm planning to sell my house and make a move in the not too distant future.  My question to the audience is: How much comparing and shopping did you do when searching for the best mortgage rate/company to deal with?

I've gotten (2) companies to provide estimates without doing a "hard pull" on my credit using the assumption that I have excellent credit, no debt, and a given price for a house, etc.
Both were very comparable (within $15) for a house at the same price in same zip code.  Of course, they say that they can provide a more accurate number if they run my credit doing a "hard pull" but I'm wondering if I should avoid doing that with multiple loan companies?

What experience can you offer?  Am I better off finding the lowest rate online and telling them to match it?  Anything else I should look for?
Any advice is greatly appreciated!

[jjandjab]

Having bought and sold a few houses in the past decade, I think the most important thing for us was picking a lender with a local branch (we used a local branch of a major multinational - TD Bank - as they had the best rates in our area, even when comparing online).

Once, when things were getting close to closing, the "corporate" office of the bank (loan originator) was not doing its part to get everything done and we were only able to close on time by having the local branch manager, our RE agent and lawyer all work together to get it done. The manager got us a significant extension at no cost - which helped save the deal (Interest rates at that time had gone up significantly since we locked at it seemed like the corporate office was doing everything it could not to close at that rate)

If it was just a refinance, I'd say the best rate regardless is fine, since you are in the house and don't have a timeline with a seller. But buying, especially if you are in a "hot market" and with rising rates, I want someone to talk with, face to face, to help out if needed.

[runewell]

There isn't a lot to it.  Shop around at multiple places to get the lowest interest rate and the lowest cost.  Tell them what your best offer is and see if they can beat it.  I wouldn't buy down the interest rate unless you are confident you are going to stick around - I wouldn't necessarily buy down the rate at all.

There are a zillion places out there (including cyberspace) waiting to lend you money, so negotiate the best you can get.

[patchyfacialhair]

I did a couple of non-hard inquiries with various banks, because I knew there would be no surprises with credit scores or large amounts of debt.

Ended up going with our credit union that we use for primary checking and savings. They are local to our city. Closing costs were not exactly the cheapest (about $500 higher) but what sold us was the ease of the whole process and the ability to get things done in one fell swoop face to face. Also, unless the credit union gets purchased or goes under, our loan will not be sold to another servicing company.

[spooky105]

When you do get around to having a hard pull against your credit, know that you can have multiple inquiries from different mortgage lenders within a 30 day period and they will collectively only count as one pull -- you're expected to shop around for mortgage rates and this policy makes an allowance for that.

[stein79]

When you do get around to having a hard pull against your credit, know that you can have multiple inquiries from different mortgage lenders within a 30 day period and they will collectively only count as one pull -- you're expected to shop around for mortgage rates and this policy makes an allowance for that.

I'd never heard that before.  Can you provide any source or back that up?

[Dave1442397]

When you do get around to having a hard pull against your credit, know that you can have multiple inquiries from different mortgage lenders within a 30 day period and they will collectively only count as one pull -- you're expected to shop around for mortgage rates and this policy makes an allowance for that.

I'd never heard that before.  Can you provide any source or back that up?

That's normal. Just google it and you'll find many sources. Here's the first one I happened upon:

"You can shop around for a mortgage and it will not hurt your credit. Within a 45-day window, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry. This is because other creditors realize that you are only going to buy one home. You can shop around and get multiple preapprovals and official Loan Estimates. The impact on your credit is the same no matter how many lenders you consult, as long as the last credit check is within 45 days of the first credit check. Even if a lender needs to check your credit after the 45-day window is over, shopping around is usually still worth it. The impact of an additional inquiry is small, while shopping around for the best deal can save you a lot of money in the long run. Note: the 45-day rule applies only to credit checks from mortgage lenders or brokers – credit card and other inquiries are processed separately."

https://www.consumerfinance.gov/askcfpb/2005/What-exactly-happens-when-a-mortgage-lender-checks-my-credit.html

[Money Badger]

@stein79,   Loan origination is a jungle for sure...    Having 30 years or so of mortgages from a few houses, I've found that shopping pays off.   Also generally, "brick and mortar" banks are quite expensive mortgage sources.   Only if you have megabucks in savings at a bank will you get a break on a loan and even then still shop around.      Fortunately, I've had good luck on bankrate's site with the deals of origination companies there that have good reputations/reviews on other lending forums.   Behind that originator is usually a larger underwriting bank that looks for very specific borrower traits (pay history, no credit drama, loan terms w/in parameters, etc.).     Then it all depends on your credit score and loan amount to determine the risk of the loan as to what level of "deal" you'll get.   If you're in the "sweet spot" of not too high an amount ($160K to whatever "too much means" to that lender) then you get better terms.  Banks want a higher mortgage balance generally to hopefully keep you from paying it off, especially if it's a low or zero closing cost deal of course...

On the other extreme, I've had horrible experiences with lendingtree twice now about 10 years apart and still get spam from their bastage lenders from the last time...   The offers weren't competitive either.   Hope that helps!

[spooky105]

FYSA:  the prime rate is currently 3.75% (as reported in the WSJ...will change the next time the Federal Reserve moves rates)

If you're looking for a standard 30-yo mortgage and have a good to excellent credit history that should be your goal. Shoot for that number and then work to minimize any fees. I paid less than $500 in fees to my mortgage provider and obtained a prime rate, 30 year mortgage about 18 months back.

I found local originators (who in turn sell your mortgage on to Wells Fargo or another large bank after 1-2 months) to offer the best rates with minimal fees. I got a few recommendations from a local real estate agent and fired away emails to all of them with basic info (income, assets, credit score, target mortgage size) -- replies were generally quick, and I went with the provider offering the lowest fees (they all offered the same prime rate).

Quotes I obtained through Lending Tree and other "big" providers were garbage, offering higher rates or upwards of $3,000+ in various fees.

[stein79]

FYSA:  the prime rate is currently 3.75% (as reported in the WSJ...will change the next time the Federal Reserve moves rates)

If you're looking for a standard 30-yo mortgage and have a good to excellent credit history that should be your goal. Shoot for that number and then work to minimize any fees. I paid less than $500 in fees to my mortgage provider and obtained a prime rate, 30 year mortgage about 18 months back.

I found local originators (who in turn sell your mortgage on to Wells Fargo or another large bank after 1-2 months) to offer the best rates with minimal fees. I got a few recommendations from a local real estate agent and fired away emails to all of them with basic info (income, assets, credit score, target mortgage size) -- replies were generally quick, and I went with the provider offering the lowest fees (they all offered the same prime rate).

Quotes I obtained through Lending Tree and other "big" providers were garbage, offering higher rates or upwards of $3,000+ in various fees.

Thanks for the note, for some reason I stopped getting notified on this. 

So I should basically just tell them "I want the prime rate"?  Since I do have excellent credit and no debt other than current mortgage (which will be used towards the down payment on next house).

[spooky105]

That's what I would be shopping for.

Your timing of having two mortgages (i.e. if there is any overlap between selling your old house and buying a new one) might effect what offers you get, but a frank discussion with an originator should clear that up.