Finding the best mortgage rate can be a bit daunting if you are just starting out. However, we have simplified it into a few simple steps that anyone can follow. Using the acronym ALP, you can figure out how to get the best mortgage rate.
You have to be able to shop without using any personal information. This is crucial for many reasons. Most importantly, it will keep you safe from lead generating sites who are intent on selling your personal information. In addition, it puts you in an advantageous position with your credit intact when negotiating the mortgage rate.
When lenders compete, you win, right? This makes a great tagline, but that is all it is—a tagline.
We will explain below as to why that is the case:
We shopped a loan with multiple loan officers from the same lender/bank and the results speak for themselves. Same loan, Same lender, different loan officers. We got back different rates, different closing costs.
So how can you tell if an LO you contacted, is offering you the best pricing? The answer is simple. You CANNOT unless you reached as many Loan officers as possible while staying anonymous and then determine whether the rate you got is the best or not. There are over 400 thousand loan officers out there, and their job is to sell the loans on commission so they can make as much money as possible. This means if you contact one, they would want you to close the loan with them so they will get the business, and hence the commission. As a result, Lenders do not compete, Loan Officers do.
If you are like many car buyers, you use Kelly’s Blue Book to find the wholesale price of a car. Similarly, you need to find out your fair pricing in mortgages, and that’s called the Par rate. However, you need a calculator that tells you the cost of the Par rate. Mortgages are set up like whack-a-mole game—as mortgage rate goes up, the closing cost comes down and vice versa. As a home buyer, it is very important that you know about this relationship. This can help you avoid making many costly mistakes and obtain a low mortgage rate.
Parlend’s Mortgage Rate Calculator will help you understand the seesaw relationship between rate and closing cost 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