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Mistakes to avoid when mortgage rate shopping online

Posted by  on Jun 08, 2011
 

Dear Melinda,

You are right, getting the best mortgage rates involves comparison shopping. And, yes, you can compare mortgage rates easily online, as long as you understand some key concepts:

Not all mortgage rate resources are alike

Some mortgage loan comparison sites appear to put you in touch with several lenders. However, the illusion of several lenders competing for your business is just that--an illusion. The site is actually sponsored by a single lending company, mortgage broker, or bank. You'll only get one quote, from them!

Other sites may simply take your contact information and pass it on to any lender willing to pay for it. You could be subjected to sales calls from dozens of lenders, and those calls could continue for weeks after you close on your new home loan or refinance your mortgage.

The best mortgage loan comparison sites are those that take the middle road. They offer a handful of quotes from a group of licensed mortgage companies that lend in your area. This approach allows you to make mortgage rate comparisons without being steered to one lender or overwhelmed by salespeople.

Get mortgage quotes from safe sites

Any web page that includes an inquiry form MUST have an SSL Certificate, which shows that the publisher encrypts the data you put in the form. How do you make sure it does? Look in the address bar in your browser. The address on a secure page begins with "https" versus the typical, unsecured "http." The "s" tells you it's a secured page. You should never fill out any form on the Web without one.

Avoid garbage in, garbage out quotes

Most people are pretty reluctant to put personal information online, and they should be. Mortgage shopping sites don't generally ask for Social Security information, date of birth, banking information, or other sensitive data. That said, understand that any quote that you get by giving minimal information (for example, a home's purchase price and your down payment amount) is of minimal value. Today, the lowest mortgage rates for purchases of single family primary residences go to those with credit ratings exceeding 740 with at least 20 percent down. Any variation from that theme probably means a cost increase. The closer to reality you want your mortgage quote to be, the more of this information you'll have to volunteer to your loan agent.

Use online mortgage quotes to improve timing

Mortgage interest rates change fairly quickly these days. That means that you may not be able to compare mortgage rates that come in over several days' time. However, if you pull the trigger on a mortgage quote form, you'll learn a couple of things: what lenders are offering at that moment, and which ones respond fastest to you. That's good information to have when shopping for a home loan.



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