How to Shop for and Compare Mortgage Rates
Buying a home is a big deal and when you are ready to make that move you want to make sure that you are getting the best mortgage rate possible. A great way to do this is to compare mortgage rates and to get the best mortgage lenders that you can find. There are several ways to do this so that you are not only finding the best rate but so that you are not repeatedly negatively affecting your credit score.
Many individuals interested in purchasing a home this year have found that the mortgage rates have not fluctuated much this year which is very good news. As mortgage rates are at an all-time low homeowners are pouncing on the great rates and some are refinancing their mortgages for better rates. However rates will not always stay low so it is important to know how to compare mortgage rates and find the best mortgage lenders no matter where the mortgage rates are.
Shopping Multiple Lenders
The first step of comparing and finding the best mortgage rates is to start shopping with multiple lenders. The key is to go to multiple lenders at the same time so that they can “pull your credit”. This simply means that they are going to do a credit check using the FICO scoring system. The reason you want to go to multiple lenders around the same time is because credit bureaus will essentially look at the inquiries as almost a single credit inquiry, instead of several inquiries. This prevents your credit score from dropping every time there is an inquiry, since all the inquiries are essentially looked at as one. Keep in mind that to have this work all mortgage lender shopping has to be done within a two week period of each other, or it will count as separate inquiries. To save yourself A LOT of time you can use companies that will shop you around to different lenders simultaneously to find you the best rate. You can click here to fill out a short form to start that process. The reasoning behind this is that shopping for mortgage rates shows that you are looking for the best deal and that you will take the best deal, therefore lessening the amount of debt that you will be in.
What Type of Mortgage Is Right For You
The next thing to consider is what type of mortgage you want. There are many different types of mortgages like a fixed-rate mortgage, an adjustable-rate mortgage, and a FHA mortgage and so on. Depending on your finances and what you qualify for finding the right mortgage for your finances is a very important step in getting the perfect mortgage. A fixed-rate mortgage is the most common type of loan and has a fixed rate of interest for the entire life of the loan. If your income is steady and predictable and you plan to live in that home for an extended period of time then this is a good loan choice for you. An adjustable-rate mortgage is when the interest rate changes periodically. This type of mortgage starts off with a lower payment and then progressively the payments get larger. FHA or Federal Housing Administration mortgages are what many first time home buyers qualify for. They are usually not as rigid in their requirements and have a very low down payment. When you know what type of mortgage you want that can really help you compare the costs and interest rates.
Amortization Period
Another factor that is important to consider is how long you want to be paying off your mortgage. If you know you will be living in your home for upwards of 20 to 30 years then a 30 year fixed mortgage may be the way to go. This will ensure much lower monthly mortgage payments. If you do not plan to live in that home for that long a different type of mortgage may be more suitable such as a 15 year fixed, a Variable Rate mortgage or even an interest-only loan. You can determine what your monthly mortgage payments will be by using a mortgage loan calculator.
There are a lot of things to consider when you are shopping for the perfect mortgage but here are a few tips to help you shop and compare mortgage rates: If you have a lot of time to spare you can shop around and talk to several lenders. That’s how most of us did things a few years back. Nowadays most of us have a busy life so it is much more convenient to have a reputable lender comparison company do all of the mortgage rate shopping for you. Either way, do it within a 2 week period so that your credit is not negatively affected. Ultimately you want to end up with plenty of quotes from banks, brokers, and online lenders.
