Mortgage shopping isn’t exactly like grocery shopping or clothes shopping, but it is actually quite similar. Ultimately when you are shopping you are looking for two things: quality and cost. If you can get a high quality product at a low cost, why would you go anywhere else? Some retailers strive on providing great quality and service to their customers but certainly don’t provide the best cost. Take Nordstrom as an example. Nordstrom is known for the extraordinary service they provide their customers and it seems you can easily find a friend, family member or story someone related to a great service story about Nordstrom. On the other side of the spectrum is Walmart. Walmart is known for great prices but probably not the best quality. I am not saying the quality of their products is the worst, but it certainly isn’t the quality of Nordstrom. So, customers typically have to decide what they are going for when they begin shopping: price or quality?
Most people I know go to one particular grocery store, or maybe two to take advantage of special sales or coupons. Why is that? I believe the reason is because of comfort. Humans are creatures of habit and familiarity. People don’t like to be uncomfortable and therefore they stick with what they know. When I go to my local grocery store, I know where the bread is, the baking area and where I can find the steak. I recently went to a grocery store I had never been to and I think I walked about 3 miles looking for 5 items. I went to the furthest spot looking for one item, just to backtrack to find the next item and back to the other side of the store. It was exhausting and frustrating. So what does a grocery store have to do with mortgage shopping? Comfort. You should find a mortgage loan officer you feel comfortable with and can easily ask the questions you need answered.
Have you ever seen the lowest price guaranteed ads? In my area, I typically see that for carpet companies. They want you business and realize that many people are price conscience and will play to that to entice you to shop with them. I was always curious what would happen if you went to Carpet Company A and got a quote to take it to Carpet Company B who offered the lowest price guarantee to have them beat it. Then return to Company A, who would then beat Company B. I am not sure where it would stop, but I assure you there will be a point where one of these companies would tell you to get lost since their profit margin had been completely diminished. Oddly enough, this is exactly what happens in the mortgage business. I have had potential customers contact me to get a rate quote to take that quote to another lender and have them beat it and return to me to beat it once more. I learned early on in my career that competing like this doesn’t make much sense for someone who wants to earn a living, but many lenders are still willing to negotiate since $500 is better than $0. My point is that there is always going to be someone out there willing to cut their prices even lower. Just remember, you get what you pay for.
Overall, you should interview probably two to three lenders to get a feel of how they work, how comfortable you are talking to them and how confident you are they will look out for your best interest. Get a general quote on rate and fees and as long as they are in line with the market, you are probably safe to go with them. If they are completely out of whack, move on to the next most comfortable person you spoke with. Find the balance of quality and price, but don’t let price be the ultimate factor in deciding your mortgage lender. Too often, I have had those customers who I refuse to negotiate with come back to me just days before closing exhausted and frustrated (just like I was at the new grocery store) asking for help from me to get their mortgage closed because the other lender didn’t do their job they way they should have.
