When consumers shop for other consumer items they buy based on criteria relevant to the category of product they are purchasing. Some types of consumer items are much easier to shop than others because they have comparable benchmarks and more tangible criteria to differentiate products. For example, when buying computers consumers are shopping for cpu speed, megabytes (gigabytes now) of memory, hard drive size, video card depending on whether they are playing games or just need a PC for business etc. Once two equivalent machines are found it then may become a matter of what brand, Dell, HP,generic,etc. as a further indicator of quality.

The next big question becomes one of pricing. As a consumer do you know exactly what you are looking for and are just shopping price at a discounter, or do you need more service and help picking the right machine? Are you knowledgeable enough to research the basics yourself or can you rely on a an experienced friend? If you don't have a friend to go with you, can you trust what a salesperson is telling you? When you decide on a machine and it comes back to price, can you find a deal? Are you in a fixed price environment or is there room to haggle a little? Should you wait for a sale? Will the salesperson negotiate? If he or she does offer a discount, how much?What are the markups in the computer industry (at retail not much)? How far can a the salesperson go?. Can you buy a new computer marked $800 for $700-$725? Or do you take a chance and buy an open box item for $550? Why is another retailer charging $1000 for the same machine in the next town? Is he just overpriced? or is the one charging $800, obscuring relevant details on particular component? Is the product new or refurbished?

Whether its, cars, computers, furniture or insurance consumers who want to stretch their purchasing power ask similiar questions in attempt to gauge prices and know how good a deal they can get . Different industries have different benchmarks on what is considered competitive, a steal, or a rip off based on the wholesale/retail pricing dynamics and cost structure of that particular industry. New cars are a big ticket item for example, but the typical retail markup is roughly 6.5%. A dealer selling a new car for $20,000 probably isn't going to make much more than $1000 or $1200. The real profit centers at most new car dealers is in the service department or in financing purchases. Selling cars is a major investment in inventory and real estate. Your not likely to get a 30% discount on a new car because it would quickly put the dealer out of business. Furniture on the other hand can be a very high markup business. A $1500 wholesale dining room set can easily be marked up 100% to 200% to $3000 or $4500. A discounter may sell the same set for $2250. A regular full price retailer would be $4500 and may knock a $1000 or $1500 when pressed. A price gouger may try to sell the same set for $5500 or more to a non discerning buyer. There is much more room to haggle.

Some consumer items are easier to compare from one retailer to another. Its a matter of of knowing product name and model # and then shopping two or more places. Many industries have a service orientated aspects as well, and less tangible qualities that are harder and more challenging to quantify, objectify, or measure. People may go to a particular restaurant for example, because they like the food, or it has good service or a unique experience. The majority of its patrons may agree it has good food, a few may not. Customers at the restaurant may perceive the service to be better, yet not know how to articulate the feeling. A more experienced restaurant reviewer may come in and confirm, yes this particular restaurant takes orders faster than the industry norm of the area which may be 15 minutes and that the steak is a cut of higher quality ( the reviewer has had the time to study the industry in more depth and usually knows the right questions to ask or the owners may give him more attention). Depending on where you shop or where you eat as a consumer, the tangible and intangible benchmarks may be easy to determine or much more hidden and harder to dissect or discern. The product or service you are purchasing can have many quantitive and qualitive aspects to it.

Financial products such as mortgages and insurance have both quantitive and  service orientated aspects that are much, much more complex than your normal weekly shopping experience and it could take weeks for the most intelligent of consumers to wrap their heads around certain concepts and their true impact on the mortgage process. Key concepts often get overlooked and when you do have questions about a particular issue you can't always trust what your loan officer is telling you. Rates are based on things such as FICO scores, DTI ratios, LTVs, etc and are not always easy to compare (until you are confident you know your individual borrowing niche) and the average consumer will usually have a tough time figuring out how well a particular company underwrites and processes loans. In other industries if you not an expert in a particular product, or can't determine quality, the fall back position is to shop by brand. If brand becomes the decider on quality the next question is can you then take that set of assumptions from another type of shopping experience and apply it to the lending industry? Unfortunately a lot of the big brand names in banking industry have a lot of problems (borne out by the 2007/2008 mortgage crisis). Brands in banking are not an automatic indicator. Big name lenders can often times not be very competitive ratewise, slow with your application, and engage in some of the bad sale practices that people would typically expect only from the more shadier mortgage brokers out there.

The goal of LoanShoppingPros is to give a consumer an overview of the way lenders do business and insight into to the unique characteristics of the lending industry, both positive and negative. We evaluate lenders based on hard numbers and tangible criteria like the rates they deliver and track the more intangible qualities such as service and their ability to process loans. Consumers can then have a framework of what to expect and how to better shop. When borrowers have trouble shopping on their own, we can offer advice tailored specifically for their particular situation.

The following is a summary and overview of parts of the process that are covered more in depth on other parts of the site. Its a quick guide/checklist to the overall process and a summary of pitfalls to avoid as well insight to the pricing dynamics of the mortgage industry. A consumer has to be both knowledgable about many technical aspects of lending and have an idea of the many forms of false advertising and less than scrupulous banker/broker sales tactics they are going to encounter while shopping. It is unfortunate but the current state of the industry is the average borrower has a very very high probability of running into mortgage brokers and lenders who will try to take advantage of them, often in a major way. (Click here for another example of how the current state of mortgage shopping/retailing compares to another type of retail industry that once had many problems but underwent dramatic changes)

Consumers should get an understanding of basic mortgage qualifying factors such as Credit, Debt To Income Ratios, Down Payments and Cash Reserves. Those are covered in the mortgage qualifying section.

Borrowers must then find their niche and whether they are Full Doc or Stated Income consumers.Different doc types are covered here.

Once a borrower knows their lending niche, its time to understand the dynamics of rateshopping and wholesale/retail interest markups.

The section on deceptive advertising will also help consumer become aware of bad sales tactics in the mortgage industry and how they affect the rate you receive

After you know your borrowing niche and have an idea of how rates work, read the overview on steps in the loan process to gain an understanding of mortgage paperwork flow.

With more grounding in the concepts behind terminology such as yield spread premiums, ratelocks, underwriting, processing, etc. we'll be able to give you a much better grasp of how LoanShoppingPros can help. The goal of this site and our service is to better prepare you for the unique challenges you will encounter in the mortgage shopping process and serve as reference point to guide you through the process.

Different consumers will find our service useful in different ways. For some we'll save them a lot of time and a great deal of stress. Some borrowers may have very very good credit, very large down payments, and are already naturally intuitive mortgage negotiators (because they have been through the process before) They may on their own find a good decent low rate lender who the lenders in our network will only be able to beat by an 1/8%. The difference between 6.5% or 6 5/8% on a 300,000 mortgage (30 year) is about 24 dollars a month. Over 30 years that adds up, so its still worth it. In other cases we may be able to save a borrower as much as 1/2% to 1% or more difference in the rate (hundreds of dollars a month or more) and thousands of dollars in unnecessary fees. It all depends on your loan amount, credit score, income ratios, down payment and many other factors. Almost all consumers will benefit one way or another both ratewise and with a deeper insight into the lending process.

(Note: Some mortgage insiders may disapprove of the way we compare the mortgage industry to other retail environments. The examples are meant as a reference point for consumers to be able to relate too. Most people shop for other items on a weekly or monthly basis. The way they shop for other goods and services influences their initial expectations of what to expect mortgage shopping. The examples are meant as illustrations into broad similiarities between the lending industry and the markets for other goods and services. They are a quick starting point. Lending is very different and has many unique characteristics that have to be understood within their own framework. Eventually as a consumer familiarizes themselves the other examples become less relevant, but not always less true. We say not less true because it is the mortgage industry in many ways itself that borrows many sales techniques from other retail industries. Lenders should take customer service to another level and treat the mortgage process differently but instead they imitate the same get'em and close'em mentality you often find on a car lot or furniture store. If you dont like being compared to a used car dealer or furniture salesman don't act like one ((apologies to the honest used car and furniture salesman out there)). Even in the more refined lending environments, companies where former attorneys, financial planners, and accountants outnumber the former furniture salesman, high pressure sales tactics and disinformation are present in subtler ways yet still seem to have as their original origin, the used car lot (our third apology to honest used car salesman). Yes, the technical aspects of mortgage lending are unique and totally different from cars, computer, etc. Oftentimes, the sales techniques are not. They just take on newer and more complex forms. The goal of the examples on this page is to give consumers an early headsup on what they are likely to encounter. The  current state of  the mortgage industry is that consumers who are not careful have a very high likelihood of paying higher rates or more fees than they deserve too. )