How to get the Best Mortgage Rate

A few years ago, it has been easier to get the best mortgage deals in town, where you need only a moderate amount of equity and an ‘Okay’ credit score to start with. Today is a different story. You truly need plenty of equity, minimal number of debts, and a really good credit score to get the financing aid you need. How to get the best mortgage rate today is all about exceeding expectations, where it is not only good enough to have a credit score of 680. In simple mathematics, the higher your credit score is, the better your mortgage rates will be.

How to get the best mortgage rate is all about preparation and common sense. Whether you are planning to get a mortgage to finance your home, vehicle, medical expenses, education, and so on, you need all that searching, comparing, and persuading to win that deal. You can start your search on how to get the best mortgage rate by going online and visiting quasi-government sites like Freddie Mac ( www.freddiemac.com ). There are many other options giving you the best loan rates and terms.

Five Surefire Ways on How to Get the Best Mortgage Rate:

1. Keep a Good Credit Score

Since many lenders put this on top of their lists, you need to take care of your credit score, as well as your income or employment history. FICO, a model made by the Fair Isaac Corporation, has been popularly used to gauge your credit score. In order to get better mortgage rates, keep your credit score higher than 700. You may also request a copy of your updated credit report from Equifax, Experian, or TransUnion, and try cleaning your records before you even apply for a loan.

2. Know Your Financial Ratio

Your credit score may give you the upper hand, yet, your lenders may also look into your Loan-to-Value ratio or the amount of your equity vs the amount of your loan. You will also have to analyze your Debt-to-Income ratio which will check just how much you can afford in paying your monthly debts.

3. Ask Information from Several Lenders

From thrift banks, commercial banks, mortgage firms, to credit unions – these lenders will have different mortgage rates and you need to contact each to know your options. Getting a broker to arrange mortgage applications for you can be a great move since this agent will have more data and access to hundreds of lenders out there. Some lenders act as brokers as well, and you need to ask so you can be clear of broker’s fee that may be charged on your loan.

4. Get All the Crucial Information

Know what you’re getting yourself into by asking your lender on your mortgage interest rates, whether it is fixed or adjustable. Adjustable rates may go up and down, therefore, it is only right to ask for the loan’s Annual Percentage Rate or APR. You may also ask for points or the fees paid to your lender and have it quoted to you in dollar amounts. Also, you need to know extra fees that come with your mortgage application like origination fees, broker fees, transaction fees, settlement or closing costs. You may also ask for the lender’s requirement on any down payment. Whenever something is unclear, never hesitate to ask.

5. Negotiate

Remember that you always have the upper hand when it comes to getting the best mortgage rates and you can always negotiate for the best deal. Make sure that the lender will write down all costs that you will have in making that loan and ask for discounts. When you are satisfied with the terms, you may request a written lock-in letter which will state the rate you have agreed upon and the points you need to pay. This will give you protection from mortgage rate increase while your application is being processed.

At the end of the day, it is not how to get the best mortgage rates in town which will help you secure a loan, but it is your resourcefulness and persistence that will. Don’t assume that just because you have temporarily lost your job or that you got ill means you don’t have the chance of having your loan approved. All you need it to take time in shopping around for the best mortgage rates you can afford to pay. Know that the Equal Credit Opportunity Act prevents lenders from disqualifying your loan application based on your race, national origin, sex, age, status, color, or religion. By knowing your rights as a consumer, you help protect yourself from credit malpractices. It will surely give you a peace of mind using that loan by knowing you got the best rate for it.

RESOURCES:

Kay, Millie. “ Get the Best Home Loan Rates with These Tips. “
October 2009. The Digerati Life.
http://www.thedigeratilife.com/blog/index.php/2009/03/17/get-best-home-loan-rates-tips-steps/

Lending Tree, LLC. “ Finding the Best Mortgage Rates. “ August 2009.
http://www.lendingtree.com/mortgage-loans/rates/mortgage-rates/finding-the-best-mortgage-rates/

Kristof, Kathy. “ How to Lock in the Lowest Mortgage Rate in Today’s Tough Market. “
Los Angeles Times. April 2009.
http://articles.latimes.com/2009/apr/05/business/fi-perfin5

Federal Deposit Insurance Corporation. “ Looking for the Best Mortgage. “ December 2008.
http://www.fdic.gov/consumers/looking/index.html