Shopping for a mortgage rate can seem challenging and overwhelming if you consider how much of the process is beyond your control. The factors that you control, however, can impact your wallet. Your credit rating and the size and type of home you plan to purchase will each factor into the loan rate qualification equation.
If you want to be armed with as much information as possible, begin by searching online for rates in your market. Lenders often release a database of rates by zip code. These rates can be accessed using websites such as Bankrate. Also, don’t forget to contact the financial institution that holds your personal account, they may offer a discount to loyal customers.
There are so many mortgage loan products on the market that a novice first-time homebuyer could feel intimidated, and if this is the case – solicit the help of a mortgage broker. These advisors can help bring order to the shopping process and often have access to products that you cannot find without their assistance.
Beware that many brokers receive a fee for securing the loan that could be passed on to you as a fee. While not an immediate problem, you will want to have a clear breakdown of fees provided to you so that you can be aware of any charges outside those associated with the cost of your home. In addition to fees associated with a mortgage broker, there are other fees that a homebuyer should be on the look for when shopping for rates. You may be asked if you’d like to pay points to buy down the cost of the mortgage loan. Each point is usually equal to 1% of interest.
After applying for any home loan, you will receive a Good Faith Estimate within three business days. Inquire with your lender and request an early or preliminary estimate to review cost before applying for the loan. You can save time and paperwork. Because a Good Faith Estimate gives you the details of your loan cost, rates, and other important details, this is an important document to review in assessing all fees associated with your mortgage. There are many fees that can be added on to a loan including application and loan processing fees and closing cost that make a seemingly great loan deal balance out to be unfavorable.