FTC: “5 Steps to a Great Mortgage Deal”

Aug 29, 2013 by

FTC Building

FTC Building in D.C.

If you owe, own, or spend money, the U.S. Federal Trade Commission’s got a lot of worthwhile resources for you on its website. (You’ll find links to some of it under FTC Fact Sheets in the right sidebar of this webpage. Keep scrolling down, you’ll find it.) And the Commission seems vigorously to defend U.S. consumers against the entrepreneurial slime and vermin that infiltrate our world and seek constantly new and cleverer ways to screw you out of some money. (If you follow me on Twitter, you know about the FTC’s steady stream of scammer body slams.) The Commission occupies a beautiful building in D.C. too (see photo I found →).

Mortgage Rates in the News

You’ve probably heard—especially if you’re in, or thinking of getting in, the housing market—that mortgage rates have risen sharply since May. After reaching a low of 3.35% the first week of May, the national average 30-year fixed rate now sits at about 4.5%, a one-third increase that’ll add about $65 to a monthly payment for every $100,000 borrowed.

The trend may have you feeling mounting pressure to get into a mortgage and a house. But shortcutting solid comparison shopping on either could turn out to be a big mistake, costing you far more than taking the time you need to make a sound decision, even if rates do rise a bit further in the meantime.

So when I ran across an FTC blog article titled “Five Steps to a Great Mortgage Deal” by FTC Consumer Education Specialist Colleen Tressler, I thought it worthwhile to encourage all you mortgage seekers to 1) take a deep breath, 2) don’t panic, and 3) consider Ms. Tressler’s ideas. Also, unlike virtually every private sector blog post you might see on the topic of mortgages, the FTC blog post includes no links to the blogger’s mortgage lender affiliates! 🙂

The FTC’s 5 Steps to a Great Mortgage Deal

I’ll summarize here Ms. Tressler’s suggestions and add a few comments.

1. Visit www.annualcreditreport.com or call (877) 322-8228 and get a free copy of your credit report. If your report includes any unfavorable inaccuracies, follow the FTC’s procedures to get corrections made before you apply for a loan.

Yes—a MUST for every mortgage shopper. And remember: you’re entitled to one free credit report annually from EACH of the three credit reporting bureaus—Experian, Equifax, and TransUnion.

2. Check your local newspaper and the Internet for mortgage rates and points when you begin shopping. But remember that additional fees won’t be included. Talk to the lender directly to get the full cost picture.

I think I’d skip the local newspaper. If you want to borrow locally, find the best deal nationally and use it to bargain with your local institution of choice. “Look at this deal I’ve been offered at Bank X—what would you do if you were me?”

3. Shop multiple lenders.

Absolutely. And make sure each knows that you’re shopping multiple lenders.

4. Negotiate the best deal that you can. On any given day, lenders may offer different prices for the same loan terms to different, equally qualified people.

Don’t be afraid to work one lender against the other. These banks are making plenty of money, right? Plus your taxes probably helped bail out a few years back the one you’re talking with, so it owes you!

5. Once you’re satisfied with the terms, think about getting a written lock-in from the lender. The Lock-In should include the rate you agreed on, the period the lock-in lasts, and the number of points to be paid.

Especially good advice in a rising-rate environment, which you’re in, bub.

I’ll add one suggestion: ask your lender of choice to do a rapid re-score analysis. You may find that you can bump your credit score just enough to qualify for a bit lower mortgage rate by moving some of your money around or paying down a credit card balance.

What Do You Think?

Are you mortgage shopping and feeling rising rate pressure? Do you have any more suggestions for getting a good mortgage deal?

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