How to Find the Best Mortgage Loan Rates
Mortgage loan rates do not have a one size fits all approached. There are a variety of factors that influence mortgage loan rates. Find out how you can get the lowest interest rate on your loan.
Find the best loan type
The best way to find the best mortgage loan rates is to make sure you are getting the right loan product. There are many options out there to choose from. Do your research and determine which mortgage loan best suits your financial needs. The differences in rates vary greatly from one mortgage product to another, so be sure you’ve chosen the right mortgage loan for yourself.
Shop around
There are thousands of lenders offering a variety of products, rates and fees. Discuss rates and products with several lenders to assure that you are getting the best deal. However, shop around in a timely manner. Interest rates changes daily so in order to truly compare rates you need to speak with lenders close to one another to get an accurate comparison and determine the best mortgage loan rates.
Furthermore, each time you apply with a lender, they are pulling your credit. You want to have all of your credit inquiries within 2 weeks of each other. The FICO scoring system will make all mortgage inquiries within two weeks of each other count as one only hit against your credit score. This will keep your credit score from dropping which can in return increase your interest rate.
Compare APR, not just rates.
While shopping around with different lenders ask about your annual percentage rate (APR) in addition to the interest rate. The annual percentage rate reflects the yearly cost of the loan by taking into consideration the various fees associated with the loan. Each lender has different fees, therefore, a lender with a lower interest rate may have an overall higher APR. Ultimately this will end up costing you more in the long run.
Have excellent credit
The interest rate you are qualified for is dependent on your credit rating. A higher credit score will yield a lower interest rate. Take the steps to get your credit score as high as possible before applying for a mortgage.
Have a substantial down payment
The larger your down payment is, the lower your interest rate will be. Lenders use the interest rate to offset the risk they take on while lending money. If there is more equity in a home the lenders are at a lower risk if the loan goes into default. This will result in a lower interest rate on the loan.
Discuss rate locks with your mortgage provider
Locking in your interest rate is a way for you to secure a lower rate. Speak with your lender about what their rate lock guidelines are. Ask about how soon you can lock your rate before closing and if there is a fee to lock your rate. Also find out if the lender allows you to “re-lock” if interest rates drop after you’ve already locked in your rate.
Buy down your rate with discount points
Paying discount points is one of the ways to lower your interest rate. However, it can be costly. Before paying for discount points do a break even analysis to see when you will recoup the costs of the discount points. If you won’t be in your home long enough to see the savings of lower loan rates, it is not advisable to buy so many discount points.
There are a variety of ways to find the best mortgage loan rates. Be prepared by having your finances in order and your credit in good standing. Choose the right mortgage product to suit your needs and then compare market rates between lenders to find the best deals.
