If you're thinking about a mortgage refinance, or getting a home equity loan, it is important to shop around. Getting multiple quotes from competing lenders and negotiating may end up saving you thousands of dollars. Many people contact a Mortgage broker who will contact several lenders with your information and arrange the transaction with one of them. It is important to note that if your broker has not contracted with you to act as your agent they may end up getting you the deal that makes them the most money. Talk to multiple brokers, pick one that you are comfortable with, is honest, and can offer references or referrals. Ask each broker what their fees are and be ready to negotiate.

If you have credit problems, still shop. Don’t think that some dings on your credit report will limit your loan choices. This is especially true if the dings were due to an illness, job loss, or any other unique circumstance. Explain to each lender or broker your situation at the time and there are several reasons why you can be trusted to make your payments on time from now on. If you can’t explain the negative marks you will probably end up paying more than someone with a great credit history. Again, still shop and compare. You could also try to remove innacuracies and repair your credit.

Compare Mortgages

When you receive quotes from brokers or lenders, take down as much information as you possibly can about their offer. Ask as many questions as you can. Each quote you get will have different fees, points, rates, terms, etc. An easy way to keep track of everything is by using a mortgage comparison worksheet. Get a list of their current mortgage rates and find out if they are the lowest for the day or lowest for the week. Check the paper and internet frequently for rates and points currently being offered.

Inquire about the type of rate they quoted you, a fixed rate or adjustable rate. If they quote you an adjustable rate mortgage (ARM), ask them how the loan and rate will vary and if it will go down when rates drop.

Talk to them about the APR, or annual percentage rate. The APR is given as a yearly rate and accounts for points, fees, and other charges you have to pay. Have your broker or lender quote points as a dollar amount, so you know exactly how much you’ll have to pay. Points are fees paid to the lender or broker and often the more points you pay, the lower your rate will be.

Home loans usually involve many fees like broker fees, fees for underwriting, closing costs, settlement fees, etc. Many of the fees quotes are negotiable and each quote should provide an estimate of the fees involved. Fees may be paid when you apply for the loan and some at are paid when the loan is closed. Occasionally you can have the fees included in the total loan amount. Have your lender or broker explain any fee you don’t understand in detail until you feel confident and comfortable.

Ask about down payment requirements as well as what you need to do to verify that the money is available. Make sure to ask about special programs currently being offered. If Private Mortgage Insurance (PMI) is required, find out what the total cost will be and how long you are required to carry it.

Once you have all of the quotes detailed, negotiate. Get the best deal that you can. Ask each one if they will waive or reduce fees or if they will agree to a lower rate or fewer points. Make sure they don’t pull a fast one by dropping one but inflating another. That goes for your rate and points, too. Remember that there is absolutely nothing wrong with asking them to give you better terms than what was originally quoted or asking them to match or beat a quote from a different lender or broker.

When you are happy with the terms, get it in writing by having them do a written lock-in. This lock-in should include the rate, the period the lock-in lasts, and the points you would pay. You might have to pay for a lock-in and rates may drop during the lock-in period. In that situation, negotiate.