Best Mortgage Rates
Best Mortgage Rates
In 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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.