How Do I Know If A Mortgage Quote Is For Real?

Summary

When you shop around for a mortgage loan you may get quotes from certain lenders.

Here is how to compare them properly.

Mortgage Quotes

When you apply for a mortgage loan you should receive a “Good Faith Estimate” within 3 days of your loan application. This good faith estimate will contain an estimate, but not a guarantee, or your mortgage rate and closing costs.

These are standard forms that you should receive from different lenders. This makes it easier to compare the costs between different lenders.

Comparing Offers

When you compare offer from different lenders you should compare offers for the same type of loan. You can compare a 30 year fixed loan offer from one lender with a 30 year fixed loan from another lender.

You should also try to compare offers made from different lenders made around the same time, if not the same day. This is because interest rates can change every day. A lender may offer a better interest rate only because the day they are making the offer interest rates may have temporarily dipped.

Is The Offer Real?

It is easy for a lender to give you a “lowball” offer. They can leave out many costs in the good faith estimate to make their offer look better than a competitor’s offer.

There are many third party costs on the good faith estimate that usually cannot be avoided. These costs usually include insurance, escrow, title charges, legal fees, taxes, and other fees.

If you get a “no closing cost” option you usually avoid paying the closing costs up front in exchange for a higher interest rate than you would have otherwise received.

Comparing Offers

If a quote is too high you may want to avoid that lender or mortgage broker. There are some lenders and brokers who routinely overcharge their customers. Do not let pressure to close a loan quickly get you stuck with a bad loan.

There are many lenders and brokers out there. You can shop around as much as you like. At most you will need to pay for your credit reports. This is usually less than $50.