Many potential homebuyers don’t know that you don’t have to settle for the first loan offer you get. You can—and should—explore different lenders. Shopping around for the best interest rate is the only way to get the most out of your mortgage.
Before you finalize your loan with a lender, send your loan estimate to other mortgage providers to see if they can offer you a better rate. This allows you to make an apples-to-apples comparison, so you know you’re getting the best loan terms.
Here’s what you need to know about comparing mortgage rates today.
A loan estimate is a three-page lender-provided resource that lists important information about your loan, including:
Additionally, the loan estimate will define any special features of the loan, such as prepayment penalties or negative amortization options.
Because every lender is required to use the same loan estimate form, it’s easy for buyers to compare offers from different mortgage providers and choose the loan that’s right for them.
When you submit a loan application, the lender has three days to send you a loan estimate. Before your lender can create the estimate, you will need to submit the following pieces of information:
As mentioned above, all lenders are required to use a standard loan estimate form, explained here.
It’s important to note that a loan estimate does not guarantee that you will be approved for a loan with that lender. It is simply an estimate of what loan terms the lender thinks they will be able to offer you based on the preliminary information you provided.
If you decide to continue with the loan application, you will be required to submit additional information before the loan can be approved.
When you receive your loan estimate, the first thing you need to do is review it carefully for accuracy and completeness. Does it include everything you and the lender discussed? If you notice any discrepancies, reach out to the lender immediately to find out why the terms changed or correct any mistakes.
Once you have confirmed that the information in the loan estimate is correct, it’s time to take your loan estimate to one or more lenders to get alternate offers.
A lower interest rate is just one factor to consider when comparing lenders. Differences in lender origination fees, points, mortgage insurance premiums, and third-party fees might make one offer better than another, even if the interest rate is higher.
When you find the mortgage that best fits your needs, finalize the mortgage application with the lender and start the next stage of your homebuying journey.
Receiving a loan estimate is exciting, especially for first-time homebuyers. But don’t let your emotions get in the way of making a sound financial decision. Think of this first loan estimate as a starting point and start looking for an even better offer. A little due diligence can save you thousands of dollars over the course of your loan.
FFB Mortgage Lenders is a highly competitive consumer-direct lender with low overhead. What that means for you is that we are able to deliver a much better interest rate than the average lender.
There is no downside to learning how much we can help you save. Check your interest rate here!
If this is your first time shopping for a loan, you probably have a lot of questions. Download our First-Time Homebuyer’s Checklist for answers to many of the common questions we hear from first-time homebuyers.