Most people think that shopping for a mortgage means getting the best deal among five or six lenders they call. I want to give you a better way to measure performance.

If you are getting a mortgage, you are in a "class" of about 600,000 other people who are also getting mortgages this month. I hope you agree with me that your goal is to be among the 10% of those 600,000 people who spend the least amount of money during the next five years. Now I can hear someone saying, "What does he mean NEXT FIVE YEARS? I want to do a deal NOW." Please go through this with me.

When you bought your homes, every homeowner would describe his loans as "better than average."  First of all, it's not true. Half got a deal which was better than average and half got a deal that was worse than average - by definition.  In any case, how do measure what kind of a deal you got? Here's a better way.

The real goal is to pay the least amount of interest.   Let's take a 5 year period.  Everyone has made 60 mortgage payments and you find out how much they paid in interest to their lenders. You could then calculate the average interest rate paid by each and then graph the results. What you'd get is one of those bell-shaped curves that looks like this.

That group in the middle - the ones shown in blue - represent about 50% of your neighbors and they went to the BIG, WELL-KNOW LENDERS that have 50% market share. (That's how they go that big!) If YOU go to one of the big, well-know lenders, you'll get an "average" loan too, just like all the other people. The big lenders look at the market the same way as  purveyors of Coke, Chevrolets, and Tide.   Lenders with huge market share are NEVER the price leaders. That fact leads me to share this rule with you:

If you want a deal that's better than all your neighbors, you cannot do the same thing they do. You have to do something different.

The people in yellow - paid more than average. It might be because they had credit problems or hard to document income and had to go to a "B" lender. In other cases, they paid more because they got the wrong kind of loan, say a 30 year fixed-rate loan instead of an ARM or vice-versa, depending on.

That leaves us with the group in red, the group you want to be a part of. How do you get to be one of those people? The answer is this: those people weren't just lucky, they just were smarter about how they got their mortgage, like getting an education.

I hope you think that method is a better way of measuring performance.

You know what? When you state it that way, I don't even think that's all that difficult. I will also tell you that I think that only 10% of the homebuyers go through the process that way. You know what else? I'll bet that's why they are in that 10% who paid the least interest! What do you think?

The other reason people get poor results is that they shop in the wrong way. For some thoughts that will help you