One of the best ways to save money on your mortgage is to get the best possible interest rate. A good mortgage rate can provide you with saves amounting to tens of thousands of dollars over the life of your home loan. However, shopping around for the best mortgage rates requires some effort. If you want the best possible rate, here are some tips to help you find the best deal:
1. Know Your Credit Score
The first step is knowing your credit score. When shopping around for the best rate, lenders will ask you if you know your credit score. While they can pull your credit and look for themselves, it’s still a good idea for you to know where you stand. You’ll get a better deal if you have good credit.
If potential lenders do want to pull your credit as you shop around, try to do most of your shopping around within 14 days. Credit reporting agencies and credit scoring algorithms usually consider all the requests for credit made for a certain type of loan within 14 days as one inquiry on your credit. Since so many people shop around for loan rates now, it is taken into consideration, so you don’t have to worry about having multiple inquiries on your credit from different lenders.
2. Compare Apples to Apples
Before you start shopping around, get an idea of what you are looking for in a loan. You will need to make sure that you are comparing similar terms. So, decide on term length, and other items. You should also find out about origination fees so that you can compare those costs as well. As you meet with lenders, you want to make sure that you are comparing similar loans, so that you can make the best decision. Decide what you want before you start contacting lenders, and write down the terms you are looking for so that you can tell potential lenders what you want. Then keep a list of the possibilities so you have it all straight in your mind.
3. Get Three to Five Quotes
When looking for the best mortgage rate, you want to get at least three to five quotes. You can talk with lenders on the phone, or meet with them. Another option is to use an online aggregator to help you get even more quotes. This simplifies the process of looking for mortgage quotes. All you have to do is enter your information once, and submit it, and then you receive several quotes from lenders all over the country. This process can help you save even more, since you aren’t limited to banks in your local geographic area. With the help of the Internet, you can get a home loan from someone across the country — and you might even see a better deal.
4. Let the Other Lenders Know You’re Shopping Around
As you shop around, make sure that you let the lenders know you are comparing rates. Keep track of your quotes so that you can show other lenders and perhaps get an even better deal. Using the Internet to find the best mortgage rate can help you, even with local mortgage lenders. If you can show your own bank a better deal online, you might be able convince your local lender to give you a lower mortgage rate. If your business is attractive enough, playing lenders off one another can be a great tactic for getting the lowest rate.
5. Lock in Your Rate
Finally, when you make a decision about a lender, lock in your rate. Mortgage rates change week to week, so you might find yourself with a higher rate, since it can take between four and eight weeks to close on the loan. Find out if your lender will allow you to lock in the current rate. It’s also a good idea to see if you can get a lower rate if mortgage rates drop before your loan closes. Ask the lender what this policy is. If possible, try to arrange matters so that you can leave space to get a lower rate, but you won’t be stuck with a higher rate if they rise.
There is no reason to settle for the first mortgage rate offered to you. Shop around, and you’ll be able get the best possible rate for your credit situation, and you’ll be able to lock it in as well.