Skip to main content

How to Shop for Best Mortgage Rates

It’s a no brainer that whenever you are getting a mortgage or refinancing done, you would always make sure that you get the best deal. However, most of the time, people do not have an idea of how to shop for the best mortgage rate. Today we will understand how to shop for the best mortgage rates and how could it benefit you.

Common Mistake while Shopping for Best Mortgage Rates


When people are in the process of refinancing or buying a new home, a prevalent mistake they make is getting a quote from different lenders on different days. For example, if you are getting a quote from lender A on Monday and Lender B on a Wednesday, this would end up in inaccurate comparison as the mortgage rates fluctuate daily.

It could be possible that lender A gave you a rate when the rates were high on Monday and lender B gave you the rate when the rates were low on Wednesday.

Know Your Scenario


It is critical to understand your scenario – are you buying a home? or refinancing your current mortgage? or getting a cash-out refinance? These scenarios affect the mortgage rates that you can get. You also need to know your actual credit score

P.S: We would suggest not to consider the credit scores which are provided online as they have been proved of being inaccurate. What we would suggest instead is to start off with one lender or talk to a couple of lenders, see who you like the most and have one of them pull your credit. 

Property Type


The next thing you need to know is your property type. Pricing for rates is different for different property types. You want to make sure you give this information to the loan officers that you are talking to and get more accurate interest rates for your mortgage.

You want to make sure you provide consistent information to each loan officer you speak to for better comparison. You also need to know if it is a purchase, how much are of a down payment are you putting down? And if it is a refinance, how much is the property worth? When the loan officer is looking at this information, they are more likely to get the best option based on your scenario.

Shopping Time Frame For Best Mortgage Rate


It is also crucial that you shop for the interest rates within a specific time frame. Try and shop for the rates from different lenders within a two-hour window for better comparison. The loan rates are tied to the financial market, and the financial market is constantly changing, and they could be very volatile.

On the most volatile day, we could see 4 to 5 changes in the rates. So if a lender is giving you a rate in the morning on such days, the same lender could end up giving a different rate by the evening. When you shop for the rate within two-hour, it will provide you with the best snapshot of which lender is giving you the best interest rate.

If you are comparing the rate from ‘Monday’ to ‘Tuesday’ that would be an inaccurate comparison because you are comparing past data to current.

Fees and Points


The next important thing you need to ask the lenders is what are the fees involved in the loan. And if they are charging any points for the rates which are quoted to you. All lenders have origination fees, and you want to know what these are for all the lenders that you are working with.

The origination fees can vary dramatically varying. So you want to make sure you get this number because it is a critical piece of the financial picture. You also want to ask if they are quoting points. Many lenders may quote you with the lowest interest.

However, the catch could be that they are covering the difference in points. Hence you need to ask the lenders upfront about points to make an accurate comparison.

Pitfalls To Avoid


The major pitfalls are the mailers. Do not believe everything that you receive in the mail. If you still think that the mailer you received is something you might want to consider at least get in touch with the lender to check if they are providing what is being promised in the mailer. Similarly, if you walk to a bank and see the rates on the daily mark board, it could be different for you.

Conclusion


Comparing for best mortgage rates could be a task. But if you do it right, you could save lots of money and might not have to worry about mortgage-related breakdowns. Taking the right steps initially while comparing can make sure you have a financial relief for the life of the loan!





Labels:
838 E 27th St, Houston, TX 77009, USA

Comments

Post a Comment

Popular posts from this blog

What is an Appraisal Contingency? — Best Guide for Homebuyers

  About Appraisal Contingency If a home is appraised for less than the purchase price included in the contract then there is a provision that is included in the purchase contract allowing homebuyers to back out of their contract this is termed as an  appraisal contingency  clause. Buyers who use financing to buy a house or are  buying homes  in areas where prices are volatile commonly use Appraisal contingencies. How do Appraisal Contingencies work? Purchase offers have appraisal contingencies inserted into them to notify the seller that the buyer intends to have the property appraised as part of their purchase for the financing process. If th e  property doesn’t appraise for the amount the buyer offered to pay then this contingency allows them the option of backing out of the contract without losing their earnest money deposit or facing other penalties. During an appraisal, a licensed professional is hired by the homebuyer to examine the property and evalu...
Post a Comment
Read more

Public Feedback Requested By CFPB

  The Home Mortgage Disclosure Act underwent certain changes and to evaluate whether it is meeting the stated goals of detecting discrimination in mortgage lending the  Consumer Financial Protection Bureau  is seeking comments. The CFPB requests for assessment of the mortgage disclosure law and checks if it meets the objectives of the  Dodd-Frank Act . To abolish discrimination in mortgage lending in 1975 the Congress enacted . The bureau said the request comes after an August report found that mortgage lenders as compared to white applicants were charging higher interest rates and denying credit to Black and Hispanic applicants. The   bureau said that with this evaluation the CFPB will be able to maintain a fair, competitive, and non-discriminatory mortgage market. They added that the assessment is an opportunity for the Bureau to get an idea if the earlier HMDA rulemakings have improved upon the data collected, thereby reducing loans on financial institutions,...
Post a Comment
Read more

What is Fannie Mae and Freddie Mac?

Understanding  Fannie Mae  And  Freddie Mac What is Fannie Mae and Freddie Mac? Fannie Mae or FNMA  is a nickname for Federal National Mortgage Association. It was established in 1938. It is a Government-sponsored Enterprise (GSE). In 1968, Fannie Mae ceased to exist as a government entity and became quasi-governmental, federally charted corporation to buy mortgages other than those insured by the Federal Housing Administration, otherwise known as FHA. Freddie Mac or FHLMC  is a nickname for Federal Home Loan Mortgage Corporation. Freddie Mac is also a government-sponsored enterprise (GSE) which was brought into existence in the year 1970 by the Congress. It provides competition to Fannie Mae and provides funds availability in the secondary mortgage market. What is Fannie Mae's and Freddie Mac's Role? Fannie Mae’s purpose is to create a secondary market for the purchase and sale of mortgages.  The secondary mortgage market ...
Post a Comment
Read more

How to Use Home Equity for Remodeling Projects

Important Guide How to Use Home Equity Everyone has to live somewhere and, everyone has to invest their money in someplace. So what happens when where you live, meets up with where your money is invested? Today we are going to discuss on  how to use home equity  for remodeling projects and things to know before using it for remodeling. For most homeowners, it is a choice between paying cash or borrowing against the equity that they have build up in their home. HELOC Or HEL? Interest rates  are still significantly low, and we are not sure how long they are going to stay that way. And home values are still rising at least on average. So taking out a home equity line of credit (HELOC) or a Home equity loan (HEL) may seem like a sensible financial move. Not always the case We have explained the difference between the HELOC and HEL in our blog post “ About Home Equity Loan  /  Home Equity Line Of Credit .” It depends on the individual’s n...
Post a Comment
Read more