Shop around to Get a Mortgage with Good Terms

Don’t just take out a mortgage with a bank where you already have an account. Another financial institution might offer you a better deal. Shopping around could save you thousands of dollars.

Getting Multiple Quotes Won’t Damage Your Credit

Request quotes from a handful of companies. Ideally, they should include a mix of banks, credit unions, and online lenders.

You might have heard that getting several mortgage quotes can hurt your credit scores. You don’t have to worry about that.

It is true that applying for a mortgage can cause a small, temporary drop in your credit scores. If you request quotes from multiple lenders in a short period of time, they will all be treated as one hard inquiry. The impact on your credit will be minimal, but your potential savings can be huge.

Consider Both the Interest Rate and Closing Costs

The offer with the lowest interest rate might not be the best deal on the table. When you buy a house, you’ll have to pay a series of upfront fees known as closing costs. Those fees can vary significantly from one lender to another.

If you plan to live in your new home for a long time, a loan with higher closing costs and a lower interest rate might save you money. If you’re only planning to live there temporarily, the amount you could potentially save on interest might not equal the additional amount you would have to pay up front.

Compare Loan Offers Carefully

Lenders structure their offers in different ways. You might not be able to make a simple apples-to-apples comparison. Look at all the terms and make sure you understand what each lender is offering.

A lender might quote you a low interest rate based on the assumption that you’ll buy discount points. That means you would have to pay thousands of dollars more in closing costs to get the low interest rate. Figure out if you would be able to afford higher closing costs and if the amount you would save would make it worthwhile.

Invest in Your Financial Education

A house is probably the most expensive purchase you’ll ever make. Before you put your financial future on the line, make sure you understand how things work and know what you’re getting yourself into.

The First-Time Homebuyer Masterclass goes into more detail about mortgages. It also covers topics like how to choose a real estate agent and how to estimate the total cost of homeownership. That information can save you thousands of dollars and a lot of sleepless nights. Sign up for the First-Time Homebuyer Masterclass today.

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