How to Shop for a Mortgage Rate
Comparing mortgage rates sounds simple ‐ just call various mortgage lenders and ask what their current interest rate is, right? Not so fast! There is more to a mortgage than just the interest rate. The total cost of your mortgage will include the interest rate, but also mortgage points and lending fees, and varies depending on your closing costs, your credit score, and even the time period you get a quote!
Follow these tips when comparing mortgage rates across lenders to make sure you’re getting an accurate comparison.
Lowest Rate Does Not Always Equal Best Loan
When comparing mortgage rates, it is important that the rate isn’t the only factor considered. Also consider the role that lending fees will play in the total cost of your mortgage. Some mortgages may have a very low rate, but very high fees, therefore increasing the total cost of the mortgage. The lowest rate may not always be the loan with the lowest cost, consider the overall costs.
Compare Rates, Not Closing Costs
When inquiring with various mortgage companies, be sure to compare rates using the same closing cost amount. When comparing with a fixed closing cost amount, you can be sure that you are actually looking at comparable mortgage lending rates.
Gather Quotes on the Same Day
Mortgage rates can change very rapidly, daily, if not more often. Be sure to gather rate comparisons on the same day to ensure you are getting the most accurate information to compare. This will also help keep your credit score as high as possible; most credit reporting bureaus will count multiple credit inquiries (like those you’ll have when getting mortgage quotes) as just one request as long as they happen in a short period of time.
Work With Lenders You Trust
It’s important to only work with mortgage lenders you trust. Taking on a new home loan is a major undertaking and having a knowledgeable and trustworthy loan officer on your side to help you through the process makes a huge difference. Your loan officer should be available and willing to answer your questions! Take time to research the lenders on either Zillow or Google+.
Ask About Length of Lock
When mortgage companies quote you a rate, they’ll typically allow you to
“lock in” that rate for a certain period of time. If you fail to close on the mortgage loan before the lock expires, you could be facing a much higher interest rate. Be sure all the companies you speak with are quoting based on the same lock‐in period, whether it be 15 days or as high as 90 days.
Though comparing mortgage rates may seem to be an overwhelming process, using these tips will allow you to gain accurate and comparable information. Resist the urge to get too caught up in the numbers. A reputable mortgage lender will offer competitive rates and personal, dependable service.