Hi, I’m Matt, also known as “the mortgage guy.” In this video, I want to discuss how to find the best mortgage rate. My goal is to provide straightforward and honest advice regarding mortgages, real estate, and finance.
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The Pitfalls of Rate Shopping
One funny thing caught my attention recently in a mortgage forum. A member shared a quote that resonated with me: “The harder you shop for the lowest rate, the more likely you are to find the biggest liar.” Unfortunately, it’s true.
When you solely focus on finding the absolute lowest interest rate and talk to multiple lenders, you may come across promises that can’t be fulfilled. Some individuals may be desperate for business or engage in unethical practices.
They might offer an incredibly low rate like 2.375% on a 30-year fixed mortgage, only for you to discover later that it comes with two points in cost, doesn’t exist, or involves fabricated stories about credit issues and rate locks.
A Better Approach: Getting Quotes and Understanding the Process
In my opinion, a better strategy is to obtain quotes from a few lenders whom you like and trust. Engage in conversations with them to gain a deeper understanding of how the mortgage process works.
If you’re refinancing, don’t solely focus on the interest rate. Merely aiming for the lowest rate to impress others can lead to unpleasant surprises down the line.
You may receive initial disclosures or progress into the process, only to discover hidden costs like $11,769 in points. The cost associated with a lower interest rate may take years to break even compared to a slightly higher rate.
Therefore, it’s crucial to work with a trusted lender who will thoroughly analyze your situation and strive to secure the best overall deal for you.
Considering Individual Circumstances
When looking for a mortgage, remember that it’s not just about the interest rate. Various factors come into play, and what works for one person may not be suitable for another.
For instance, if you plan to stay in the house for a long time, it might make sense to pay points to obtain a low interest rate. On the other hand, if you’re retiring and on a fixed income, you might want to prioritize a lower monthly payment.
These are the kinds of conversations you should have with your lender. Additionally, consider alternative options such as comparing rates with lender credits or choosing a higher rate if you plan to move in a few years. Each situation is unique, and finding the best mortgage should align with your specific circumstances.
In conclusion, it’s important to approach mortgage shopping wisely. Instead of solely chasing the lowest rate, focus on finding a mortgage that fits your needs and circumstances.
If you’re located in California and would like assistance, don’t hesitate to reach out to me and my team. We’re dedicated to helping clients with their refinancing needs and structuring deals that make sense for them individually.
Our approach is centered around providing the best solution for you, rather than merely advertising attractive rates with hidden costs. If you have any questions, feel free to contact me. Thank you for watching, and until next time!