Private mortgage insurance (PMI) can be an expensive requirement for your home loan, as it adds more to your monthly payment costs. This is a safeguard that your lender will take out to cover a portion of the amount you borrowed in case you default. Up Next: P.I.T.I.: Understanding The Parts Of Your Mortgage Payment […]
6 Tips For Shopping For The Best Mortgage Rates
When shopping for homes it is vital that you do your research so you can not only find the right home for you and your family, but the best mortgage rates.
Mortgage rates are determined by a variety of factors such as your credit score, down payment, debt-to-income ratio, and more. When shopping for the best mortgage rates, you will need to take these factors into consideration.
Here are 6 essential tips for shopping for the best mortgage rates:
Improve Your Credit Score
Before you begin your search for the best mortgage rates you need to check your credit score and if needed, improve it. Your credit score is your numerical expression of your creditworthiness—your ability to pay back what you have borrowed.
If you need to improve your credit score, you can do so by:
- Paying debts like student and car loan on time, every time
- Getting a secured credit card
- Get credit for rent
Good credit gives you valuable negotiating power and more financial options that you may not have had otherwise, such as lower rates.
Before you begin your search, get referrals from people you know and trust such as friends and family. Ask them what company or lender they used when they purchased their home and what their experience was like.
You can also look at reviews of companies and lenders online to get a feel of what they are like. Remember to take online reviews with a grain of salt.
Don’t Be Afraid To Negotiate
When it comes to getting the rate you want, don’t be afraid to negotiate. To understand the costs associated with the loan and to be better able to negotiate, make sure you get a three page loan estimate of all the costs associated with a mortgage within 3 days of receiving your application.
Visit Multiple Lenders
Shopping for mortgage rates are not a one and done experience. It takes time, dedication, and research to find the best rates.
That is why you should always visit multiple lenders before deciding to settle on a rate. Everybody has different rates and fees and how they structure loans. So what may look like good savings on the surface may cost you extra over time.
Visiting multiple lenders and getting Good Faith Estimates (GFE) from them will give you some negotiating power in that you can go to one lender with another’s lower rates and negotiate a better deal.
Budget For Additional Costs
Create a homeownership budget to take into account everything you will have to pay when both purchasing and owning a home, as well as an emergency repair fund. A loan estimate provided by your lender can help you with a more detailed budget.
Lock In Your Rate
Once you have found the best rate for you and signed the contract ask your lender to lock in the rate so if it fluctuates you will not lose the rate you signed on for. This may come with a fee but the peace of mind you will receive knowing you are getting the rate you want is worth it.
Always choose a mortgage company that had excellent customer service so you are not left hanging and wondering if you will ever hear back from an agent.
Our agents here at SmartMortgage will always get you the loan information and help you need so you can find the best mortgage rates. They will also help answer any questions you may have in your search for the perfect home.