Best Mortgage Rates

Best Mortgage Rates

Best mortgage ratesPinIn the wake of the economic meltdown, mortgage rates have fallen to previously-unimagined lows. Home loans and re-fi’s are better than ever…for those Americans who qualify. Yet with these ten tips, potential homebuyers can learn to make the best of their borrowing.


Tip #1

To help determine the total cost of your loan, request a Good Faith Estimate from your lender. A GFE, as they’re commonly called, will include an estimation of all costs and fees involved in the total transaction. Such estimates, however, do not include any third-party costs. And remember, a GFE is only an estimate. Your final costs may vary depending on circumstances.

Tip #2

When you apply, your lender will commit to your rate in writing – if you ask him. So know when to get locked-in. Lock-in rate periods range between 30 and 90 days. Ask for the details of each lender’s lock-in before you make your comparisons.

Tip #3

If parents or other family members have offered to help with your new home’s down payment, it’s important that you arrange to have the money in your bank account at least two months prior to obtaining your loan. Otherwise, you may need a letter explaining that the money was a gift, not a loan.

Tip #4

When searching for the best mortgage, borrowers may be forced to choose between loans featuring higher rates with lower points and lower rates with higher points. Don’t mix apple and oranges. When making mortgage comparisons, potential borrowers should compare rates to rates and points to points. A point is a fee equaling 1% of your loan amount. Consider the number of points in each mortgage offer, and make sure you compare them with other potential mortgage lenders.

Tip #5

For big savings on your overall loan, consider paying half your house payment every two weeks instead of making one full payment each month. At first glance, the amount may seem the same. But, actually, it will result in one extra payment each year. The additional payments will go toward the principal of your loan, not the interest.

Tip #6

As a rule of thumb, borrowers with good credit should never pay more than 1 to 1.5 points, depending upon the loan involved. Experts say borrowers with poor credit or complex loan situations may expect to pay as much as 2 percent, however.

Tip #7

Federal law allows borrowers the right to receive an itemized list of fees prior to the date of closing on your loan. Read over the list ahead of time, and check the costs against those you agreed to pay.

Tip #8

Always use APR, annual percentage rate, when comparing all loans. APR is a common way of expressing interest figures that includes the sum of all interest, points and fees. APR is an easy method for comparing the overall cost of your loan over time. Always compare the APR on two identical loans, and you’ll be able to easily choose the one that’s least expensive for you.

Tip #9

For best comparisons, request all your mortgage interest quotes on the same day. Rates can vary daily, so check them all at once. It’s the only way to guarantee where you’ll find the best deal

Tip #10

The rates quoted in print, radio or TV ads may no longer be up to date by the time consumers decide to put in an application. Don’t just assume– call lenders or check online to get accurate, updated information.

Remember, doing your homework is always the most effective way to enter any financial situation. If you come prepared and knowledgeable, you will almost always end up with the best deal.

Angie Picardo is a staff writer for NerdWallet. Her mission is to help homebuyers stay financially savvy and take steps towards better credit with NerdWallet’s balance transfer cards.

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22 responses to “Best Mortgage Rates”

  1. Jen Carl says:

    Thanks so much for this article. I wish I would have read it when my husband and I purchased our first house. We just went with our bank thinking it would be easier, but realized that we ended up paying too much and we should have shopped around. We ended up refinancing and saving a lot of money.

    • Angie Picardo says:

      Jen, I’m sorry to hear that, but I’m glad that refinancing was an option for you. How did you know it was the right option?

      • Jen Carl says:

        We didn’t really. We had a high rate on our mortgage and we wanted to reduce it to save cash. Our goal was to bring the monthly payment down so we would have less of a strain staying within our budget. We thought the bank gave us a fair rate, but I guess we should have shopped it around. Who knows, maybe we could have done better. The next time, we’ll know better, and might be giving you a call.

    • markus says:

      Great tips here! I appreciate any info you have on mortgaged rates. I feel like just about everywhere, I’m getting screwed. Anyway, the info is great. THanks for sharing.

  2. Jon A says:

    Hey there’s some great tips here. I think everyone should make sure to get themselves an expert to help out with things like these. Knowledge is power!

  3. Jack Smith says:

    If you have done some research around about this question, you may have noticed that most government or private financial institutions give a negative answer. Especially when someone had a bad record of credit, which impacts your chances of getting accepted for a financial mortgage even further.

  4. Sunnie says:

    I had no idea how points worked. This is going to help me a ton with purchasing my house. Thanks for the great info.

  5. Frank says:

    These are really good points, I’m surprised by a few of them! The first one about GFE I’d heard a number of times – most real estate agents want to see more than a pre-approval these days with so many buyers looking for deals in the market. I had no idea that I had to have my down payment secured and in the bank two months prior though, thanks for that advice! I’m just in time, but I definitely would have screwed that up without your reminder.

  6. Erica Holloway says:

    Is it ever worth it to refinance early and pay the penalty? My husband and I are locked into a ridiculous 3 year rate- we want to refinance with another institution but will cost several thousand dollars? I guess it’s a matter of cost versus savings? Is there a way to reduce the penalty or ‘get away from it?’

  7. Rant Goyaskpu says:

    Dealing with finances is never fun, and picking a mortgage is one of the biggest financial decisions you will ever have to make. Your article has surely focused on key notes of shopping around before making a decision, being familiar with all types of fees which one will incur and checking the credit reports.

  8. Jery S says:

    Remember to get an official appraisal of the house before you buy it, too. A real estate agent told me that the house I was considering buying had a “market value” of $230K, then there was the value by the county for real estate taxes, which was $190K … then I asked for an official valuation by a certified appraiser – and it came it an $160K! If I had believed the real estate agent’s idea of what it was worth, I would have paid $70K more really worth.

  9. Nicholas says:

    Great article! I am currently a student, looking to buy house in a few years. Your article is very helpful for me.

    @Jery S

    Wow, I am glad you managed to avoid paying $70k extra. Real estate agents are not always accurate, you have to check with others too.

  10. Government Loan Pro says:

    You’d think they’d keep their advertisements up to date. Oh well guess you really can’t trust (most of) everything you see on tv.

  11. Angie Picardo says:

    Hi Erica,Yes, it’s definitely a matter of cost/benefit. Sit down and weigh out the cost. Unfortunately, it’s very rare to get the fee waived. The only way to get out of a contractual obligation is to prompt the other party to the contract to let you out. Some sub-prime borrowers have found a community group willing to intercede on their behalf. However, you have to prove that the original terms were unreasonable or grievous, but they may be able to persuade the lender to rewrite the note.

    Good luck!

  12. Buddy G. says:

    Very helpful post with good mortgage rate. I love the aspect where you wrote “For big savings on your overall loan, consider paying half your house payment every two weeks instead of making one full payment each month”. That’s a new innovative idea to me.

    • Angie Picardo says:

      Sometimes little tricks like this makes managing your finances a little more palatable. I do this with most of my bills, if I can!

  13. Elisa says:

    Mortgage rate are a pain to understand, but I appreciate the info on how to find the best deal. Perhaps I’ll be a bit more buyer-market-savvy when all is said and done, no?

  14. Jessica says:

    Wow, this is great info and I didn’t know about most of this. My husband handled the purchase of our house 5 years ago and I wasn’t very involved in it. After reading your article I feel more informed about how the process works.


  15. Lucinda says:

    I have not come across Tip #5 before. After considering it, it’s a great idea to split up the payment into half every two months. That tip is a real catch – thanks a million!

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  17. Sabrina Hale says:

    In addition, in some cases a higher monthly payment in a move to a shorter amortization could help you build substantial equity in a much shorter time.

    • Gust Lenglet says:

      The higher monthly payment or adding additional principal to your regular monthly payment will go a long way to paying off your debt, especially in the case of credit card debt.

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