How To Get The Best Mortgage Rate
Knowing how to get the best mortgage rate can literally save you thousands of dollars over the lifetime of a home mortgage. Locking into a low interest rate when purchasing a home will save you the hassle of trying to refinance in future years.
- Shop mortgage rates from many lenders. Contact credit unions that you may be associated with as well as various commercial banks. You do not have to have an account at a commercial bank before applying for a mortgage. Mortgage companies and mortgage brokers will also be able to quote you the current interest rates on many types of mortgages.
- Compare mortgages based on the mortgage type. Get quotes for 30 year fixed rate, fifteen year fixed rate, and adjustable rate mortgages. It is important to compare similar types of loans. Confusing a 30 year fixed rate quoted from one bank to a fifteen year fixed rate from another bank will not help you in comparing the true total cost of the loan.
- Be willing to pay down points to get a lower rate. Points are fees that the lender charges and they usually equal one percent of the total loan amount. Many lenders will offer lower interest rates to borrowers who are willing to pay more points.
- An adjustable rate mortgage offers lower mortgage rates. If you do not plan to stay in home more than a few years, it may be to your benefit to get an adjustable rate mortgage. The initial interest rate is usually quite a bit lower than a fixed rate loan. The disadvantage of this type of loan may occur if you stay in the home beyond the initial fixed rate period when the mortgage rate adjusts. While it is unknown how the mortgage rate may fluctuate, it may increase quickly.
- Be prepared to pay for all fees and closing costs. Lower interest rates are usually applied to mortgages where the borrower is willing to pay the fees and closing costs. There are many no-cost mortgages that allow you to add all the fees and closing costs into the mortgage, but they usually charge a higher interest rate.