Five tips for savvy mortgage shopping

Americans love to comparison shop – but apparently not for mortgages. Don’t be afraid – it’s easy to get the best deal on a home mortgage if you know what to look for.

Are you intimidated when it comes to mortgage shopping, even though spending a day at the mall or browsing online stores is your idea of heaven?

You’re not alone. A recent survey conducted by Harris Interactive and the Lending Tree discovered that 40 percent of Americans spoke to only one lender when selecting a mortgage, even though 96 percent said they always compared prices when shopping.

In order to get the best deal on your mortgage, it’s important to shop around. Here are five tips that will take the fear out of the process.

1. Know your budget

If you know what you can afford, you can get right to the point when talking with lenders. Create a monthly budget, so you’ll know exactly how much you can spend on a payment. Your next step is to check the range of current mortgage rates. Plug those numbers into a mortgage calculator to determine the size of the mortgage you can afford. Then, when you speak to lenders, you’ll be armed with information that will make conversations go smoothly.

2.  Check your credit report

Your credit score determines if you’ll get the best available rates. Examine your credit report to make sure there are no errors. Get a copy of your credit score, so you’ll know if you’ll be eligible for the best rates. To qualify, you’ll need a score in or above the mid-700s.

3.  Speak to lots of lenders

Banks and mortgage lenders want your business. As a result they’ll ALL be courting you! Look for a lender both online and off, who’s helpful, understanding, and takes the time to thoroughly answer all your questions. If someone doesn’t treat you with patience and respect, go elsewhere – there are plenty of other options.

4.  Know your product options

Don’t accept the first loan that’s offered because you think it’s the best deal out there. On any given day, there may be different rates and options available for the same loan. Did you know that lenders and brokers get higher profits if they sell you a loan with higher fees, points, and interest rates? The only way you can make sure that you’re getting the best deal is to speak with a variety of sources.

5.  Get smart

Don’t depend on a bank or broker to educate you. Know in advance what you’re looking for, and you won’t feel stupid. Learn about fixed- and adjustable rates, and closing costs. Then, when you compare prices, you’ll know exactly what you’re paying for.

You probably didn’t marry the first person you ever kissed. Why? Because that person may not have been the best match for you. The same goes for mortgages. Have the courage to check out all possibilities, especially since you may be living with it for the next 30 years.