Real Estate Expert: 'Our friend is a banker - Should we use him for our sale?'
Question: For our loan, should we use our banker down the street? We’ve known him for years so we trust him. But should we still shop around? - Jillian in Alabama
Answer: Definitely give your banker a chance, but if you can shave a couple hundred off your monthly mortgage, you owe it to yourself to shop around.
You may trust him, and he may get you a great deal at his particular bank, but he is limited to the loan products his bank offers. A wide array of products exists at different lending institutions, like direct lenders, mortgage brokers and credit unions, which may be a better fit for your needs.
In a situation where you do find something better, feel free to run it by him. I’m sure he would appreciate a chance to compare and contrast what is out there with you.
Plus, if you are a high net worth client or if he has some pull, he may be able to get his company to match or beat it the best offer you find.
But always always always compare apples to apples. You may get a better rate from someone else, but read the fine print to make sure you really are getting a better deal. Things like pre-payment penalties or paying extra points upfront can make it seem like you are paying less each month - but the reality is that you will end up paying for it on the back end.
Some people get swindled by teaser rates, not discovering until it is too late what they have gotten themselves into.
Tip of the day: Request a Good Faith Estimate (GFE). A GFE is an itemized breakdown of the costs and fees associated with securing a loan. It is a standardized form that all lenders have to provide, which means that it is a great tool for buyers to compare and contrast loans.
The good news is that since the market crashed a few years ago, the GFE has been overhauled for more transparency to make it easier for consumers to digest.
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