As a realtor, you are likely well aware of the challenges associated with securing a mortgage for your clients. It can be tempting to take the shopper's route in search of the best deal - shopping around different lenders until you get just that. But is this really an option? Is it effective enough to recommend to one's clients? We're here today to look at all aspects of mortgage shopping and help you determine whether or not advising your clients to shop for mortgages is something they should do when purchasing or refinancing their homes.
It helps in evaluating mortgage options.
One of the advantages of shopping around for a mortgage is that it allows you and your client to compare different options from multiple lenders. This can be beneficial, especially if one lender offers something more advantageous than another. Your client can turn to another and potentially secure a more favorable deal if one lender won't budge on the rate or terms. By shopping around, clients may be able to find lower rates or better terms that could potentially save them money over the life of the loan.
Find a loan that is tailored to your client's specific needs.
Every client's situation is unique, and shopping around gives them the opportunity to find a loan that is right for their individual needs. This could include features such as a lower interest rate, a lower down payment, a longer repayment period, or lower fees.
The process can be time-consuming.
However, it's important to remember that there are downsides to shopping for a mortgage. For starters, the process can be lengthy and labor-intensive. You and your client may have to submit multiple applications with different lenders in order to find the best deal — and this can take up valuable time that could otherwise be used on more important activities like finding the perfect home or applying for other types of loans. Additionally, clients may end up having to pay hefty application fees when submitting multiple applications.
Shopping can sometimes lead to confusion.
Trying to compare lenders and find the best price might leave customers feeling overwhelmed and confused. Without expertise in finance or an understanding of which terms are most beneficial for their individual needs, it's easy for shoppers to become overwhelmed. Furthermore, it's not unheard of for lenders to take advantage of shoppers by offering them less-than-ideal terms or rates — even if they have great credit scores and financial histories.
Final Thoughts
Ultimately, the decision of whether or not to shop for mortgages is up to you and your client. It may be beneficial in certain scenarios but can also be time-consuming and confusing. Therefore, we recommend considering all factors before recommending this approach so that your clients can make an informed decision when it comes to financing their new home.
It's also important to remember that a mortgage broker or lender can help. A mortgage broker can provide you and your clients with options from multiple lenders without having to do all the legwork yourself. They can also explain the different options and help you decide which is best for your client.
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