What You Need To Know Before Shopping For a Morgtgage

You have decided you want to refinance your mortgage. Whether your reasons are based on a need or a want, you better find the best loan officer or your in for a bumpy ride. A ride that can be devastating to your financial well being as well as to your credit score. Shopping for a mortgage should really be an interview of your loan officer.

If you are getting a consistent rate quoted to you by various company's, you can safely assume that your offers are valid. But if you get one quote that is, say 2% less than all the others, you need to be extremely skeptical. If this happens to you then you are best to launch that quote and tell the loan officer you are not interested.

You need to use common sense when shopping for a loan. In the lending industry there is really not that much difference in rates between company's. You also need to be sure that you are comparing apples to apples. In other words, make sure you provide the exact same information to each lender you are shopping with. Do not tell one lender you think your house is worth one hundred forty thousand and then tell the next lender it could be worth one sixty. This will not give you the results you are looking for.

Here are 5 tips you need to know before you start shopping. Use this checklist to help you get started:

1. Have a good idea of what you think your house is worth and why you think it is worth that.

2. Know your current interest rate, the outstanding balance, and how long the remaining term (number of years) is.

3. You need to know how much your annual property tax and homeowners insurance are.

4. You should know if you have any derogatory items showing on your credit report (ie. collections, judgements, bankruptcies, etc.).

5. Know your goals. What are your financial goals. What do you want to accomplish by refinancing. Be specific. Do you just want to lower your interest rate, take cashout of your equity, or consolidate bills.

Being prepared by knowing these five things will help you find a competitive quote that is right for you. Be prepared to give some personal information to the loan officer to complete the application. You will need your social security number, date of birth, income and employment information. Each company will need to review your credit history as well as your credit score. Your quotes will mean nothing without reviewing your credit report.

Make sure you pay attention to what each loan officer tells you. If something doesn't sound right or misleading, it should throw up a red flag. Ask questions before deciding which offer to accept. Contrary to popular belief, the lowest quoted rate is not always the best or most acurate quote.

Unless you already have a relationship with a certain lender or broker, you may be wondering what company is the best. Well there are about two thousand plus mortgage lenders, so where do you start?

Here are three great places to start your search.

1. The most obvious is your current lender. Many times you can save money on closing costs by going through your current lender. If you deal with a broker this might not be the case, or if you don't like your current lender you might not want to call them. Fortunately you have other options.

2. Search online for mortgage lenders and read about each company. Select 3 or 4 companies and either apply online or find their phone number to call them direct. Make sure that you are prepared (see, 5 things you need to know before shopping...).

3. Probably the easiest route would be companies like LendingTree.com . They offer a service for borrowers to have mortgage companies compete for your business. They allow you to make one application and have up to 4 lenders give you a quote.

Many companies nowadays can lend in multiple states, so they may not be local. This might detour some people but remember, it is your house and you need the best loan available to you. Sometimes local isn't always the best. True, you can look the loan officer in the eye, but if you don't shop you won't know what else is available. It could end up costing you thousands of dollars.

Insiders tip of a lifetime: There is not much difference in the rates between good mortgage companies. Service and value are what you need. Make sure you get to know your loan officer as a person, after all you will be conducting serious business with him/her.