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Life Events, Pay Down My Debt

23 Ways to Get an Engagement Ring Without Going Into Debt

23 Ways to Get an Engagement Ring Without Debt

A marriage proposal can lead to much happiness, but it also can mean having to purchase an expensive engagement ring and, subsequently, getting into debt. If the diamond industry has anything to say about your engagement ring purchase, you’ll spend anywhere from one to three months’ salary on a diamond engagement ring. On average, couples spent $4,000 on engagement rings in 2012, according to a 2013 report from Jewelers of America.

However, a little forethought and some creativity can lead to significant savings and even a debt-free engagement ring. Think of it this way: It can be far more romantic to propose with a paid-for ring than to drag the equivalent of a car payment into your marriage. Here’s how you can purchase that ring without breaking your bank.

Set a budget

1. The first step you should take in the ring-buying process is setting a realistic budget for yourself. Don’t just go shopping with no maximum price in mind, as that may lead to you making a purchase you can’t really afford. If you know what you want to spend beforehand, and make sure you stick to that, you are already showing the kind of discipline that can help you avoid serious debt.

Heirlooms are a wallet’s best friend

Jewelry passed from generation to generation denotes sentimentality and fiscal prudence. Ask your family, or your future spouse’s family, if they have any heirlooms they would like to pass on. Keep in mind: Heirloom jewelry will be free, but the service and upgrades can run from a few hundred to several thousand dollars. If you do obtain an heirloom ring, consider these three options.

2. Leave the ring intact (except for resizing and repair).

3. Create a new setting for an heirloom diamond.

4. Incorporate a new band into the old ring design.

Buy your diamond on the cheap-ish

Real diamonds are never truly inexpensive, but knowing what and when to buy can save you a bundle.

5. Shop in the summertime. Because winter proposals are very popular (think Valentine’s Day), it can make a lot more financial sense to buy your diamond in the off-season. The summer months can offer stable pricing at a discount.

6. Buy diamonds shy of critical weights. If you want a full-carat diamond, look for something around .9 carats instead. You’ll get close to the same look at a nice discount.

7. Look before you buy. Compare diamonds at various areas of the color and clarity spectrum. If you can’t tell the difference in the diamond’s appearance, choose the less-expensive option. Also, be sure to comparison shop at different retailers; don’t just go with the first ring you love, as you may find something very similar, for less, at another shop.

Replace the diamond, save the difference

Thanks to the diamond industry’s multi-decade, multi-billion dollar advertising campaign, diamonds remain the most popular stone in engagement rings, but forgoing the traditional gem can save you thousands. Consider these emerging trends.

8. Choose synthetic diamonds. Diamonds created in labs share the same properties as mined diamonds, but they cost up to 75% less than traditional diamonds, and they are a great choice for those seeking to avoid conflict diamonds.

9. Replace a diamond with moissanite. A gemologist will never tell you this, but moissanite (a synthetic material) is the hardest gemstone used in jewelry next to diamonds, and it ranks high on clarity and color scales, too. It’s not a valuable gem, but it is beautiful. (Pro tip: Ask your future spouse before you go this route. Many people do prefer authenticity.)

10. Pick an alternative gemstone. Pearls or jade are popular choices outside of the United States, and garnet and topaz are gaining popularity stateside. If you want something out of the ordinary, consider alternative gemstones, but be aware that some gemstones are actually even more expensive than diamonds.

11. Skip gemstones altogether. Ornamental rings (especially knots) are popular choices for those who want to skip traditional gemstones. Handcrafted gold rings can be purchased for as little as $200 on Etsy.

Forgo tradition

Some of the best ways to save money on engagement rings involve breaking tradition, and some couples are more open to an alternative ring style than others. These are a few ring choices that definitely buck tradition.

12. Wooden rings: Wooden engagement rings occupy a large niche in the market, and can be a cost-effective alternative to precious metals. Wooden rings run anywhere from $50 for simple bands to several thousand dollars for rings that include ornate details and gemstones.

13. Tattooed rings: Some couples chose to get tattoos instead of rings, citing that nothing says forever quite like a tattoo. Keep in mind that this may be a dangerous option, as you will have a much harder time removing a tattoo than a ring if your relationship ends (either before or after the marriage).

14. Leather rings: Leather rings can include braiding, engraving and colored beads, among other stylings, and will certainly save you a bundle compared to a diamond. If you don’t want to go with real leather, faux leather can work as well.

15. Go dutch. If the ring in question is outside of your price range, consider asking your sweetheart to split the cost with you. As you’ll be combining finances after you’re married, this may actually lead to some great money-focused conversations.

Save money now, upgrade later

If your partner has a big diamond taste, but you’ve got a small budget, then consider upgrading later on. Here’s how.

16. Propose with costume jewelry. If you think you can save up for the real ring by the time of your wedding, an inexpensive piece of costume jewelry may be just right for the proposal.

17. Build as you go. Start with a simple band and stone, and add more or bigger gems for anniversary milestones, or upgrade when you can afford it.

Buy used

Consider buying a ring that already has a history. You can have the ring professionally cleaned to give it new beauty and make it “yours.”

18. Visit pawn shops. You may be buying the ring of a recent divorcee, but the savings can be irresistible.

19. Search estate sales. If you regularly shop estate sales, you might uncover a vintage ring at a spectacular price. Rings that aren’t presented with a certificate of authenticity will give you room to negotiate on price, but you may accidentally buy overpriced junk. This technique is best for people with an eye for authenticity.

20. Shop on eBay. Pre-owned rings from eBay can represent about a 30% discount over identical new rings, and many owners provide certificates of authenticity.

Creative ways to get cash

Whether you’ll spend a few hundred dollars or thousands, an engagement ring doesn’t have to mean big debt. Consider a few creative ways to save the cash you need to pay for a ring in full.

21. Sell your memorabilia. Your partner may not be too enthusiastic about your KISS memorabilia, or your 27 signed hockey jerseys. Selling these to help pay for an engagement ring will be a double sign of your love.

22. Save up, way in advance. If you’re not currently in a serious relationship, but you think you’re the marrying kind, consider setting aside some cash for a future ring purchase. While some people may find this a strange thing to do, there is no harm in being over-prepared. If you don’t end up using the money to buy a ring, it will be on-hand for other potential purchases (think a wonderful vacation, or a luxury item you really want).

23. Get a side hustle. People are increasingly taking on side hustles to earn extra cash, even if they have full-time jobs. This can include selling your artistic creations on Etsy, becoming an Uber or Lyft driver or writing freelance articles. Then you can put all the extra money you earn into an account for a ring.

Consider a personal loan

It is definitely ideal to be able to purchase an engagement ring without going into debt at all. However, if you simply have to finance at least part of the ring’s purchase, you might consider a personal loan, as you may be able to get a better interest rate than with a credit card, depending on your own credit and where you are able to obtain your loan.

Bottom line

Getting married can be an expensive undertaking, and you don’t want to put yourself in a difficult financial place just by purchasing the engagement ring. Keep in mind the alternatives to the traditional pricey diamond, and also remember that the love you share with your partner should be far more important than buying a ring with a sky-high price tag. Avoiding debt as much as you can also means you’ll be starting off your new marriage on a financially healthy note.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

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Personal Loans

Rocket Loans Personal Loan Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

APR

7.16%
To
29.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

Rocketloans is a digital finance business that is part of the Quicken Loans family. ... Read More

Rocket Loans personal loan details
 

Fees and penalties

  • Terms: 36 or 60 months
  • APR Range: 7.16% to 29.99%
  • Loan amounts: $2,000 to $45,000
  • Time to Funding: Same day funding for up to $25,000
  • Credit pull: Soft Pull to see offers. Hard credit pull once you submit an application.
  • Origination fee: 1.00% - 6.00%
  • Prepayment fee: None
  • Late payment fee: $15 per occurrence
  • ACH return fee/returned check fee: $15 per occurrence

Eligibility requirements

  • Minimum credit score: 640 (Using a FICO® 9 model).
  • Minimum credit history: Not specified.
  • Maximum debt-to-income ratio: Not specified.
  • Minimum income: Not specified.

Rocket Loans does not lend in Iowa, Nevada, or West Virginia. You must be at least 18 years old to apply for the loan (or 19 in Alabama and Nebraska). Your credit score, existing debt load, or income may disqualify you from a loan from Rocket Loans. Your loan rates will be based off of your income, your credit history, your debt-to-income ratio, homeownership and the size of the loan.

You may be required to submit documents to verify the accuracy of your information (such as pay stubs or tax forms).

Applying for a personal loan from Rocket Loans

From start to finish, applying for a personal loan from Rocket Loans takes just a few minutes.

  1. Before you can see any offers, Rocket Loans requires you to enter your personal information, including your name, address, Social Security number, phone number, employment status, income and homeownership status. Rocket Loans uses this information to do a “Soft Pull,” which will allow it to analyze your credit history, debt-to-income ratio, and overall debt burden. The credit pull will not show up on your credit report.
  2. After a minute or two, Rocket Loans presents a list of personalized loan offers. The offers include the loan amount, monthly payment, length, interest rate (Autopay rate) and the APR (which includes the funding fee). As long as you’re able to provide income and address verification, Rocket Loans will underwrite the loan with the terms presented.
  3. After choosing a loan option, Rocket Loans will verify your identity and income information. It may request that you submit documents (pay stubs, driver’s license, tax returns etc.). Rocket Loans will also have you log into the bank account where you want to receive the funds. The company does this to make sure it sends funds to the right place.

During the verification process, Rocket Loans will do a hard credit inquiry. This hard credit pull could impact your credit score.

Once Rocket Loans verifies all of your information, you’ll be instructed to sign the loan documents online. Then, Rocket Loans will transfer the loan to your bank account via an electronic, automated clearing house transfer (ACH transfer). Funds up to $25,000 may be available the same business day, but funding could take up to three business days based on your bank’s rules.

Pros and cons of a Rocket Loans personal loan

Pros:

Cons:

  • Fast application process. Rocket Loans has an easy online application that minimizes the need to find extra documentation. If you qualify, you could receive the funds the day you apply.
  • Available 24/7/365. Rocket Loans doesn’t take days or evenings off. Their loan offers are fully underwritten, so you can apply and be approved for a loan at your convenience. Loan funding only happens on business days.
  • Individualized offers. Rocket Loans only shows individualized offers. You don’t have to wonder what your interest rate will be — Rocket Loans will show multiple offers based on your ability to repay.
  • Originations fees. Personal loans from Rocket Loans carry a 1.00% - 6.00% origination fee. In contrast, many digital lenders have no origination fees.
  • Moderate-to-high interest rates. Borrowers with excellent credit can see rates as low as 7.16%, but other lenders offer better rates. Some borrowers can face interest rates as high as 29.99% APR.
  • Limited options for repayment terms. Borrowers can choose between 36 or 60 month terms. Other lenders offer more repayment options based on a borrower’s ability to repay.

Who’s the best fit for a Rocket Loans personal loan?

If you’ve shopped around and compared offers from several personal loan lenders, then you’re likely ready to make an educated decision about which lender is right for you. Rocket Loans makes it easy to shop because you can get individualized offers based on your personal information before you even have to apply.

In the end, Rocket Loans may not offer the best rates or terms, but it will give you a point of comparison. Plus, checking your rates on Rocket Loans won’t hurt your credit.
After you check your rate, you can compare Rocket Loans’ offers with rates from other lenders.

Since you know from our review that Rocket Loans carries a 1.00% - 6.00% origination fee, which is paid upfront, you should look for loans that not only offer a better rate, but also don’t carry an upfront fee. If you can’t find a better deal elsewhere, Rocket Loans may be the best option for you.

People who need their loan funded fast will find Rocket Loans most valuable. The application process takes just a few minutes, especially if you have pay stubs or tax documents handy. Once your loan is approved — which can happen almost immediately — Rocket Loans will send the funds to your bank. Depending on your bank’s rules, you can gain access to the funds the same day.

Rocket Loans consumer reviews

Rocket Loans has an A+ rating from the Better Business Bureau. Consumers reviews on LendingTree, our parent company, tend to paint Rocket Loans in a positive light when it comes to their customer service. They have 5 stars out of 5 in responsiveness and customer service. They’ve scored 4.5 out five when it comes to interest rates.

They do lag behind when it comes to fees and closing costs, earning just a 4.0 — this is likely because they have an origination fee while other online lenders do not.

Consumers have commented that you receive your funds quickly and the process is simple. “Bam, done!” said a review by Sara from Circle Pines, Minn. “Very fast and easy process!”

Rocket Loans FAQ

Rocket Loans offers mortgages, reverse mortgages, refinances, debt consolidation loans, home improvement loans, medical expense loans, auto loans, small business loans and other loans for personal use.

You can use your personal loan funds for any personal needs or pursuits outside of student loans and illegal activities.

You have the option of signing up for automatic monthly payments, which are deducted from your bank account each month. Alternatively, you can also mail in your payment by check.

A late fee is charged if a monthly payment is not made by 2 p.m. Eastern Standard Time within 10 calendar days of the due date.

If you think you might have trouble paying your bill, Rocket Loans encourages you to contact them by phone at 800-333-7625 so they can help you find a solution. If you do end up defaulting on your loan this will impact your credit in the future.

If you don’t qualify for a loan from Rocket Loans, you can work on strengthening your application by improving your credit score or debt-to-income ratio. You can reapply for a loan if your financial circumstances change.

In order to qualify for funding from Rocket Loans borrowers need to live in a state where the company does business. That means they can’t reside outside of the United States.

Alternative personal loan options

LightStream

APR

4.99%
To
16.79%*

with AutoPay

Credit Req.

Not specified

Terms

24 to 144*

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


*Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66.

LightStream is the online personal lending branch of SunTrust Bank. It sets itself apart by offering no-fee loans (including no late fees and No origination fee). Loans from Lightstream carry some of the best interest rates on the market, with rates ranging from 4.99%–16.79%. People with excellent credit can borrow $5,000–$100,000 from LightStream for 24 to 144 months.

SoFi

SoFi
APR

5.99%
To
18.07%

Credit Req.

680

Minimum Credit Score

Terms

24 to 84

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

SoFi offers some of the best rates and terms on the market. ... Read More


Fixed rates from 5.99% APR to 18.07% APR (with AutoPay). Variable rates from 5.74% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of October 10, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.74% APR assumes current 1-month LIBOR rate of 2.05% plus 3.08% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

All rates, terms, and figures are subject to change by the lender without notice. For the most up-to-date information, visit the lender's website directly. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.

See Consumer Licenses.

SoFi Personal Loans are not available to residents of MS. Minimum loan requirements might be higher than $5,000 in specific states due to legal requirements. Fixed and variable-rate caps may be lower in some states due to legal requirements and may impact your eligibility to qualify for a SoFi loan.

If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

SoFi is another online-only lender with decent interest rates (5.99%–18.07% for fixed-rate loans and No origination fee). Personal loans from SoFi have terms ranging from 24 to 84 months.

In addition to its favorable rates, terms and policy on fees, SoFi is also one of the only lenders that offers “unemployment protection” on all personal loans. Borrowers who lose a job will be allowed to temporarily stop payments for up to 12 months. SoFi also offers nontraditional perks to its members including free career coaching and networking events.

Prosper

APR

6.95%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

2.41% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. ... Read More


For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

Prosper is a peer-to-peer lending place that offers 36 or 60 months fixed-rate personal loans for $2,000–$40,000. Rates at Prosper range from 6.95%–35.99% APR which includes the cost of a closing fee (also known as an origination fee). People with good or excellent credit may find better rates from other lenders, but those with bad credit do have a chance to be approved for a loan at Prosper.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

Jolene Latimer
Jolene Latimer |

Jolene Latimer is a writer at MagnifyMoney. You can email Jolene here

Get Personal Loan Offers
Up to $50,000

$

Won’t impact your credit score

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News

7 Ways to Reduce Stress When Shopping For a Mortgage

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

iStock

In today’s hot real estate market, finding a house you can afford can be a major challenge. But finding a house isn’t the only frustrating thing about house-hunting. Finding the right mortgage to buy the house may be even more complex, overwhelming and stressful. That said, if you’re going to buy a house, you’ll probably need one, and making the right decision on your home loan can save you money for years to come.

Here’s how to find the right mortgage while keeping your stress level in check.

Knowing your budget

Before you start looking for you dream house, it’s important to figure out how your monthly mortgage payments will affect your budget. “Don’t let a lender or broker talk you into a loan that is more than you’re comfortable with,” said Kim Anderson, a financial advisor with Rooted Planning Group, based in Fargo, N.D. “The monthly payment shouldn’t be so great that [a person] can’t save for retirement or college or vacations or whatever else is important to them.”

In the long run, focusing your search on houses you can easily afford may be one of the best ways to reduce the overall stress of buying a home and taking out a mortgage. Mike Caligiuri, a Columbus, Ohio-based financial planner explained, “When people see that they can buy a house and still become financially independent, it takes a lot of the stress away.”

Not sure how much house you can afford? Consider using an affordability calculator to help you plan before you start shopping. But remember, this calculator will show you the top end of your budget. It may make sense to buy less house and have smaller payments.

Shopping for a mortgage before you make an offer

One of the most stressful times to shop for a mortgage is when you already have an accepted offer on a house. Once you have an accepted offer you have a lot of financing work to do. You have to find a lender, decide on a mortgage and submit all your loan documentation. Then the lender has to put the loan through underwriting. All this work doesn’t leave much time for shopping for the best rate. Matthew Broom, an Atlanta-based financial planner explained, “If you want to be able to act quickly when you find a home you love, you need to begin preparing long in advance. That includes getting preapproval from multiple lenders.”

During the preapproval process, some lenders allow you to “lock-in” an interest rate for a period of time. But even if you can’t lock in a rate, getting preapproved can help you shop for a house with confidence.

Ian Bloom, a CFP with Open World Financial Planning in Raleigh, N.C., advises clients to, “be upfront with the lenders, and tell them what you want. Explain that you don’t want the financing part of the process to be a problem. The lenders are salespeople, and they should want to earn your business.”

Looking at mortgages you understand

One major source of mortgage-shopping stress can be the complexity of mortgage products. To reduce that stress, only consider mortgage products you really understand. “Unless you’ve got a good reason [to choose another mortgage], I think a plain vanilla, 30-year fixed rate mortgage is a great choice,” Bloom said.

Of course, you may have a good reason to choose a 15-year fixed rate mortgage, a construction loan or some other unique loan. But if you’re planning to live in your house a long time, it’s tough to go wrong with a mortgage where your payments will stay the same for thirty years.

Starting your mortgage search online

When it comes to finding the best rate on your mortgage, consider starting your search online. It’s especially important not to assume you’ll get the best interest rate by walking into a local bank or credit union. Caligiuri told MagnifyMoney, “There are online mortgage companies that give substantially better rates than your local banks. You’ll get the best rates by comparing lenders”. He also emphasized that online mortgage comparison tools may help you get to the best deals more quickly. ”If Expedia works for travel, why wouldn’t you use the same type of technology for a bank loan?” Caligiuri posited.

Comparison shopping online is a great way to find the best rates without the pressure of a salesperson pushing you to make a decision. When you do start speaking directly with a lender, be sure to mention that you’re comparing lenders. This may encourage them to offer their best rates right away.

Having your documentation ready

Some lenders will require a lot of documentation from you before you can officially complete your application. Expect to provide bank statements, W-2 forms, recent pay stubs, tax returns, evidence of your current rent or house payment and proof of identification. Instead of waiting for instructions from a lender, gather all of these documents into a single electronic (or physical) file folder. Then you can send copies as the loan officer requests them.

Once you’ve officially applied at a lender, the lender will give you a written loan estimate within three days. The loan estimate isn’t an official loan offer. But having an estimate in hand can dramatically reduce your stress. Plus, the loan estimate shows the important numbers to understand, like your loan APR and the monthly payments.

Asking for time to review your loan estimate

When you have a loan estimate in hand, a lender may push you to put down a refundable deposit to lock in a loan rate. They are understandably eager to close a deal with you, but the lender’s timeline isn’t your timeline. Do not put any money down until you’ve had the opportunity to review loan estimates from multiple lenders.

Instead of making a hasty decision, ask the lender for a day or two to review the loan estimate and compare it to other offers. Then, take advantage of the time to review the loan estimates.

When you’re comparing offers, focus on the APR (Annual Percentage Rate). The interest rate tells you the cost of borrowing money, but it doesn’t include the fees. APR, on the other hand, includes the total cost of the loan. Caligiuri explains, “The APR bakes in all the costs and fees of borrowing. It’s really the most important number to consider.”

Borrowers should pay attention to upfront costs (such as discount points or mortgage origination fees) to be sure they have the cash on hand to cover the fees. But if you have enough cash to close the loan, then the APR number will tell you which loan is the best deal. You want to choose the loan with the lowest APR.

Working with a lender that makes you feel comfortable

While comparing rates and fees is important, choosing the lowest cost loan might not always be in your best interest. “I tell clients to compare rates with two or three different lenders, but to choose the person who is easiest to work with,” said Bloom. “You’ll probably make a better decision when you work with someone who doesn’t stress you out.”

If you want to work with a lender that didn’t offer you the best rate, ask if they have a rate matching policy. Some lenders will match the written offers from other lenders. Even if the lender doesn’t match rates, you may want to choose a lender for reasons other than the loan cost. The right lender should make you feel confident in your decision, and the more comfortable you feel, the happier you’ll be in the long run.

Bottom line

Taking out a mortgage is a huge financial commitment. You want to make a decision about the loan with as little frustration and outside pressure as possible. By giving yourself a long timeline, preparing your budget and understanding the loan, you maximize your chances of success while minimizing your overall stress.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here