Finding the Best Mortgage Rate
Written by: Martina Hargrove
Consider All the Fees When Shopping for a Mortgage
Shopping for the absolute best mortgage rates isn't just a smart move for your present financial situation, but is one that could benefit you for many decades, depending on the length of your mortgage loan.
Whether it's for purchasing your very first residence, refinancing your current home, or as a home equity loan, mortgage prices and rates are variable, and may also be negotiable under some circumstances. All of the costs and fees, and there are several, associated with mortgages should be considered when trying to determine the best rates, as simply knowing the expected monthly payment amount isn't nearly enough to make an informed decision.
Some of the costs to consider when determining which lenders offer the best mortgage rates include:
Fees
Numerous fees, many of them negotiable, are assessed and added on to the price of a mortgage. Additional costs such as underwriting fees, settlement and closing costs, as well as any applicable brokerage fees must all be figured into the overall amount. One has the option of borrowing more money to cover all of those associated costs, although this, of course, will raise the overall amount of the loan.
Points
Usually linked to a loan's interest rate, the more points one pays, the lower the rate will be. "Points" equal monies paid to a lender, or mortgage broker, for a loan, and most local newspapers list information such as points and rates in their real estate section on a weekly basis. For the fees, you will have to contact the company and ask for them.
When obtaining quotes, remember to ask for real dollar amounts, instead of just the point values so that you have an accurate picture of what you will be expected to pay.
Rates
All lenders will provide a list of their current interest rates as well as whether or not this quote is representative of that particular day, or the entire week. Make sure to ask if these rates are fixed, or adjustable, which may then increase the amount of monthly payments in the future. If they are adjustable, ask if the payment will also then decrease if the annual percentage rate (APR) happens to go down.
Obviously, the more money you have to put toward the total cost of the home, the lower the payments will be, the less interest will be paid, and you may even be able to negotiate a better rate with a significant amount of cash on hand.
Mortgage Lenders
For finding the best mortgage rates, there are several types of lenders to obtain quotes from besides the traditional bank. Mortgage companies, credit unions, and thrift institutions also issue mortgage loans, or you also have the option of going through a mortgage broker, which provides access to more lenders, but will be compensated for either in the form of extra points, or even as an additional factor to figuring out your individual interest rate.
Even if you feel you have exemplary credit, it's always wise to thoroughly read through a recent copy of your credit report before applying for a large transaction such as a mortgage. By doing that, as well as taking the time to shop for the best mortgage rates, followed by a bit of negotiating, you could literally be saving yourself thousands of dollars over the course of the next several years.
