When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
4 tips for finding the best mortgage rate for you
Mortgage rates are determined by many factors such as your credit score, down payment, and various economic conditions. To really know if you’re getting the best mortgage rate for you, it’s best to first understand how the market works.
Here are four tips for finding the best mortgage rate for you:
Research your mortgage options
There are many types of mortgages available, which one is ‘best’ depends on your unique situation. Conventional, FHA, USDA, and veteran loans are just a few. Each has its own qualifications and rate details. For example, VA loan rates are typically lower than rates for conventional mortgages and privately backed mortgages. This is because the Department of Veterans Affairs (VA) backs a portion of each loan to protect borrowers against default. However, it is only available to current and former military service members who qualify.
Check your credit report for accuracy
Checking your credit report is free and something you should do at least once a year or before making a large purchase. Checking your credit report for accuracy gives you a sense of what loan program your score will qualify you for. If you find errors on your report, you will want to report them well before you apply for a mortgage, since your credit report may undergo changes as the error is investigated, which can negatively impact it. If you find the errors after you have already applied, contact your lender regarding the best way to move forward.
Improve your credit score
Improving your credit score is an excellent way to get a good mortgage rate as it gives you valuable negotiating power and financial options. A good credit score shows lenders that you are responsible for your finances and are considered a low-risk borrower, leading to better mortgage rates.
Paying bills on time, only opening new lines of credit when necessary, and having an established credit history can all help improve your credit score.
Lock in your rates
Many mortgage companies allow you to lock in your mortgage rate as you shop for homes. If rates go up, you will not lose the rate you’re signed on for. Locking for an extended period of time often comes with a fee, but the peace of mind knowing you have the rate you want is worth it.
Guild’s Lock and Shop program* allows you to keep your rate for 90 days, even if rates go up in the meantime. If rates go down, you can take advantage of a one-time float-down option.
*Upfront lock-in fee required
For full Lock and Shop terms and conditions, visit www.guildmortgage.com/cap-hbe-termsThe above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.