How To Compare Mortgage Rates
It is imperative that you learn how to compare mortgage rates before purchasing a home. Your mortgage rate can make the difference between a manageable monthly mortgage payment and losing your home to foreclosure. Mortgage rates are the amount of interest you must pay on the overall amount of your home loan. Even if you have good credit, some lenders offer better mortgage rates than others. Thus, obtaining a home loan through the first lender that approves your application may be a big financial mistake. Compare mortgage rates to ensure that you pay the least amount of interest possible on your home purchase.
- Get your FICO scores before you attempt to compare mortgage rates. You can purchase your FICO scores directly from the Fair Isaac Corporation that calculates them by visiting myFICO.com. Although you may obtain a free credit score elsewhere, free credit scores may differ substantially from FICO scores. Your FICO score is the credit score that lenders look at and will help you compare mortgage rates more efficiently.
- Call the lenders whose mortgage rates you wish to compare. Tell the loan officer you speak with at each bank your FICO scores and the amount you wish to borrow toward a new home. Ask the loan officer what sort of interest rate you could qualify for. Do not allow the loan officer to formally pull your FICO scores himself. This leaves an inquiry on your credit report and temporarily drops your credit score. Your goal is simply to get an estimated interest rate so you’ll know which lender or lenders can offer you the best mortgage rates once you fill out a formal application.
- Consider the mortgage rates that each lender quotes you. Fill out a formal application with the bank that offers the lower estimated interest rate. Once you fill out one application, you can fill out as many mortgage applications as you need to within 30 days and your credit score will be unaffected. Filling out mortgage applications entitles you to a good faith estimate and an official mortgage rate quote.