How can I find the best mortgage rate?
You can find the best mortgage rate by shopping around. In fact, the more lenders you compare, the more you may save on interest rates and fees. First time homebuyers may find lower rates than those typically offered by lenders. In addition, state and local governments often offer programs to support first-time homebuyers. Talk to your local housing authority to learn more about your options.
Shopping around is just one way to find a low mortgage rate. Rates vary based on the type of loan you want, your down payment size, and your credit score. Each of these factors into your mortgage application and influences the rates available to you. If you're not finding the rates you expect, try looking at other types of loans, offering a larger down payment, or boosting your credit score.
For example, when looking at mortgages, you'll need to decide if you want an adjustable-rate mortgage (ARM) or a fixed-rate mortgage. ARMs usually offer lower introductory rates. However, those rates usually increase after a time. A fixed-rate loan tends to offer a slightly higher interest rate -- but that rate is fixed for the duration of your loan.
How do I compare current mortgage rates?
When comparing current mortgage interest rates, start by comparing rates for the same type of loan. Compare 15-year loans to other 15-year loans, and fixed-rate mortgages to other fixed-rate mortgages.
Don't just read about mortgage rates online -- apply for pre-qualification at multiple lenders. When you apply for pre-qualification, lenders look at factors unique to you, such as your credit score and down payment, when determining your mortgage rate. This can help you more accurately compare different lenders.
Shopping around for the best mortgage lenders is best done in a short time frame. The three major credit reporting bureaus (Experian, Equifax, and TransUnion) encourage borrowers to shop around within a period of 45 days, depending on the bureau. You can apply with any number of lenders within this time frame. No matter how many applications you submit, these credit bureaus will only count one credit inquiry against your credit score.
Each lender you apply with provides a loan estimate. This document outlines a loan's terms and fees. It includes the interest rate, closing costs, and other fees such as private mortgage insurance (PMI). Be sure to compare all of these fees and costs to get a picture of which offers you the best overall deal.
