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Is there really a difference between mortgage companies? How much could I really save if I go through the hassel of shopping around for my mortgage? Answer |
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Who should I call? Some people tell me that Brokers have the best deal while others tell me that Lenders, Banks, or Credit Unions will have it. Is one really any better than the others? Answer |
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How do Mortgage Companies make money and why do their rates and fees vary so much between them? Is there a secret formula that allows a mortgage company to offer better deals than other mortgage companies? Answer |
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How much is "Shopping for a Mortgage" like "Shopping for a car"? Answer |
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What do Good Mortgage Companies do? Answer |
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What are some sure signs of a Mortgage Company I shouldn't use? Answer |
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How can I tell a Good Mortgage Company from a Bad one? Do they act differently? Are there any tricks that Bad Mortgage Companies use that you could warn me about? Answer |
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How much cash will I need to purchase a home? Answer |
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Is there really a difference between mortgage companies? How much could I really save if I go through the hassel of shopping around for my mortgage? |
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There can be large differences between the "deals" (rate / costs / service) that you are offered from different mortgage companies; potentially representing thousands of dollars at closing and potentially hundreds of dollars every month in payment. The benefits of shopping are getting into the right program (not all companies offer FHA as an example), getting a lower rate, and saving thousands in closing costs; not to mention being able to deal with a loan officer who will take the time to make sure you understand what you are getting into. And don't take my word for this, just call any closing attorney you know or used in the past and ask them how much rates and costs can vary between mortgage companies. I think you'll be surprised. |
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Who should I call? Some people tell me that Brokers have the best deal while others tell me that Lenders, Banks, or Credit Unions will have it. Is one really any better than the others? |
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First, you should call anyone and everyone that you want to. Shopping for a mortgage is just like buying a car; you should talk to every type of car dealer out there that you want to. If someone tells you that a Broker will always have your best "deal" because they are set up with hundreds of Investors and can shop for you, then they are probably a Broker. If someone tells you that a Lender will always have your best deal because they do more of the work and take more of the risk then they are probably a Lender. The same goes for Banks and Credit Unions as well. |
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How do Mortgage Companies make money and why do their rates and fees vary so much between them? Is there a secret formula that allows a mortgage company to offer better deals than other mortgage companies? |
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Like any other business, all mortgage companies price their loans to cover their costs and provide a profit. A mortgage company can increase the money they make by charging their borrower a higher rate and / or higher fees. They can also "mark-up" other fees (like charging more for the appraisal than what the appraiser charged them). And just like any other business, companies with higher costs and those wanting greater profits will have higher rates and fees than those operating with lower costs and not wanting to make as much per loan. The formula for offering the best combinatin of rates and closing costs is simple: Keep your costs down and don't be greedy. I would like to think that Georgia Mortgage Services, Inc. follows this formula better than anyone. |
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How much is "Shopping for a Mortgage" like "Shopping for a car"? |
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Shopping for a mortgage and shopping for a car are very similar. Consider the following:
- In both cases you are dealing with a commission only salesperson who has a financial incentive for you to get your worst deal. The same is true for the company they work for: The worst deal for you is the best deal for them; provided that they don't lose you as a customer.
- Both industries use deceptive advertising to "get you in the door" in order to give you their Sales Pitch. You can trust the rates you see in the paper as much as you can trust the car prices you see in the paper.
However, shopping for a mortgage is worse for the following reasons:
- With buying a car you are usually only comparing price. With a mortgage you need to compare programs, rate, and about 17 different fees.
- A car salesperson can't call a 2-door a 4-door or a 6-cylinder an 8-cylinder but a mortgage salesperson can call a mortgage that adjusts in 5 years a 5-year Fixed Rate Mortgage.
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What do Good Mortgage Companies do? |
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- Good companies employ "Educators" to make sure you understand what you are getting into. Bad Companies employ "Salespeople" in order to try to overcome their higher rates and costs.
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What are some sure signs of a Mortgage Company I shouldn't use? |
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- They try to collect money, up-front, before you've locked
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How can I tell a Good Mortgage Company from a Bad one? Do they act differently? Are there any tricks that Bad Mortgage Companies use that you could warn me about? |
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Mortgage Companies with the best deals act like they have the best deals and Mortgage Companies that don't have the best deals act like they don't have the best deals. This is because the salespeople that work for Mortgage Companies know if their deals are good or not. If they aren't, then they use certain tactics in order to get your business anyways.
What does a Mortgage Company with good deals do?
What tactics does a Mortgage Company without the best deals do?
- Trying to keep you from shopping. These tactics include trying to collect money as soon as possible, forcing you to go to their office just to get a Good Faith Estimate, not giving you a copy of your credit report, and so on.
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- Not providing you a Good Faith Estimate
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How much cash will I need to purchase a home? |
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The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
Earnest Money: The deposit that is supplied when you make an offer on the house
Down Payment: A percentage of the cost of the home that is due at settlement
Closing Costs: Costs associated with processing paperwork to purchase or refinance a house |
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