Generally speaking, you are exposed to all sorts of scams and myths when you start looking for a mortgage. This creates a lot of confusion and uncertainty to a first time home buyer, which explains why they leave thousands of dollars on the table. What then, should you stop searching and looking for good mortgage rates? The answer to that is a resounding NO!
But, you should be careful when shopping for your mortgage rate. This is because the system is set up to make the lenders win, not the borrowers.
Here are some myths regarding Home Loan shopping:
One Lender, One Rate
Nothing can be further from the truth. One lender could have thousands of Loan Officers (LO) and each LO could offer different pricing due to their commission structure with the lender. Hence, you cannot use the mortgage rate quotes offered by one loan officer from a single lender/bank to determine what the best rate is even from that lender/bank. To effectively comparison shop for your mortgage rate you need a shopping tool dedicated for that purpose.
Comparison sites do comparison shopping.
Majority of the comparison sites do not offer genuine mortgage comparison. Instead, they are set up to generate leads using your personal information. They are lead generation websites, and they make money by selling your personal info that you enter into the forms in their sites. They have no interest in finding you the best rate or in your financial wellbeing.
Shopping around can’t save me much
According to CFPB 75% of borrowers only shop with one lender. That’s amazing since the average borrower leaves close to $25,000 dollars on the table during the shopping process. Given the right tools, they would have done their mortgage comparison shopping right.
Banks, online lenders, small shops have better rates or process.
Over the years, it has been proven that nobody has better rates than anyone else. Rates start out at the same place for every lender but by the time they are padded for the LO’s commission, they look different to the borrowers. Loans do not get easier or faster because they are processed with a mobile or web app; all those claims are done purely for marketing
This is why you need Parlend’s Mortgage Rate Calculator and other tools that will help you find your fair rate and cost in realtime 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