For every endeavor, there are merits and demerits.
For the purpose of this subject, I will only tackle the worst-case scenario as regards financing your home loan. We will leave the “Meth lab in the basement” theory to others.
Generally, the borrower is on the receiving end of a system that is designed to favor the lender. So when they shop for a suitable mortgage, they end up leaving thousands of dollars on the table.
In this section, we are going to explore a few mistakes that borrowers make when they are shopping for mortgage rates:
1. Allowing Comparison sites to compare home loan rates
Many of the comparison sites online are lead generation platforms. They are only interested in obtaining your personal info. They want your personal info, because, as lead gen sites, your personal info is their product to the lenders. So they are essentially selling the personal info you entered their site to the lenders who pay them a fee for each person’s personal info. They have no interest in your financial goals.
2. Using a loan officer recommended by your friend or Cousin.
According to CFPB, 75% of borrowers only shop with one lender. There are many reasons why borrowers choose to use one loan officer, but whatever the reason may be, it does not justify limiting your options to get the best mortgage rates. Choosing and sticking to one loan officer based on proximity and other non-financial factors is not a good idea, as it has been proven that the average borrower leaves close to 25 thousand dollars on the table during the shopping process.
3. The trap of one lender
One Lender, One rate right?
Usually, one lender could have thousands of Loan Officers (LO). Many borrowers think they are using different lenders when they change their loan officers, only to find out that they have just subscribed to another package of their lender. In a bit set up their commission plan, each LO would offer different pricing.
This is why you need an extensive and reliable set of shopping tools. At Parlend, we offer free mortgage shopping tools that will help you in finding a fair rate and cost in real time, while keeping you anonymous.
Check out our free mortgage shopping tools at https://www.parlend.com
This question was initially answered in Quora by our co-founder and mortgage ninja Kevin. View in Quora