mortgage tips

[jch]

A few tips off the top of my head:

1. A pre-approval/pre-qualification isn't worth the paper it's printed on. It has no legal meaning. What you want is a "Conditional Approval" with a "Loan Estimate", which has a legal meaning. See: https://www.consumerfinance.gov/owning-a-home/loan-estimate/
2. Banks don't make money off the interest on mortgages. The profits are entirely on fees/points/locks. Your Loan Officer's compensation is tied to how many fees they can pile on. When you get the Loan Estimate, ask your Loan Officer exactly what every fee is and whether it can be removed. "Document fees" can be like $600, and basically mean printing a PDF. There's also a section called "Services You Can Shop For". You should absolutely shop around and get a gut check on those fees. Very frequently all these different parties are in cahoots (illegally).
3. Consumers put too much emphasis on the rate and not the overall cost of the mortgage. When comparing mortgages from different lenders, you should compare the (upfront_costs + interest_paid_over_expected_time_of_ownership). That's the only way to get an apples to apples comparison.
4. The average term of home ownership is less than 7 years. Folks generally think they will live in a home longer, but they don't. At every point in the past a 5/1 was a better deal for most folks than a 30yr fixed, but shit is absolutely cray right now, so that doesn't necessarily apply at the moment.