Shop you

Nearly half of mortgage consumers don’t shop around for a mortgage, according to the Consumer Financial Protection Bureau (CFPB), the Federal agency responsible for regulating the mortgage industry. A CFPB survey of 5, 000 people who got a mortgage in 2013 showed that 47 percent of consumers considered only one lender before deciding where to apply, 77 percent of consumers actually applied with only one lender, and rates on a 30-year fixed conventional (non-FHA) loan varied by more than 0.5 percent among lenders.

How long should I shop for a mortgage?

Rates change throughout each day as mortgage bonds trade. Before the 2008 financial crisis, it was considered highly volatile for rates to move up or down .125 percent in a week. Now rates can rise and fall as much as .25 percent in a day.

To compare lenders accurately, you must get quotes from all lenders on the same day. If you’re buying a home, you will need to get those quotes before each home offer you make. You’ll do this until a seller accepts your offer, at which time you must select a lender. If you’re refinancing, you’ll compare lenders’ quotes each day until you lock a rate with one of them.

How do I know if a quote is accurate?

There is a direct relationship between rates and closing costs. The higher your closing costs, the lower your rate, and vice versa.

As such, the CFPB requires lender rate quotes to include all line-item closing costs and annual percentage rate (APR), which shows what the rate would be if the fees were built into the rate.

When you get your quotes from your various lenders, make sure you’re comparing rates with fees and APRs. One rate might be lower because fees (and corresponding APR) are higher. You won’t know which lender is most competitive until you see all the fees and the APR from each lender on the same day.

How much home purchase rate shopping is enough?

A rate lock must be for a specific property. You can’t lock a rate for a home you’re buying until you’re in contract to buy it. This means you’ll have to shop rates for the duration of your home shopping.

And it’s not just about the rate — it’s about your lender’s ability to perform on time. There will be a contract between you and the seller that requires you to have formal loan approval, appraisal, and closing done in specific time periods.