The first thing a client should hear from their real-estate agent before starting to look for a new home is “Get pre-approved”.

As a seasoned lender, if I had to advise on the next step after getting pre-approved, it would be for clients to get all their rate shopping and comparative analysis out of the way ASAP . Often times buyers decide to shop for a rate, compare mortgage terms, or try to negotiate for lower fees after they have an accepted offer and have opened escrow.

Unfortunately for these clients, this is a backwards way of doing business.  By the time an offer is accepted and escrow has been opened, the count down on your 30 day escrow has already begun.

Spending the first 1-2 weeks of escrow trying to manipulate the system, find that magic lender who will provide a 0.125% lower rate, or pitting mortgage consultants against each-other in hopes of saving $500 is a waste of time.

In today’s market with a standard 30 day escrow, playing these games and trying to rate shop can easily delay a closing by 10 days or longer.  These closing delays are not only frustrating to the buyer and the seller, but also be very costly and potentially put your transaction at risk.

Considering most foreclosures, short sale approvals, and many standard deals carry a $100-$200 per diem penalty for late closings , the savings a client may have managed to obtain by  aggressively shopping can quickly get eaten up by these late fees and other closing concessions.

Additionally, during the time a client spends rate shopping and not committing to a lender, there is no guarantee rates will go down.  As likely as rates are to drop, they are just as likely to rise.

So if you are thinking about doing some aggressive rate shopping or comparing the fees of ten different lender, I strongly recommend you do this prior to an offer being accepted.

-Contributing article by Thomas Bayles, found on facebook here