The mortgage interest rate has been known to rise and fall, and when it’s at an all time low, it may be time to purchase a new property or refinance an existing loan. But how do you know which finance company will offer you the best mortgage rate? The options are plenty and each will promise to give you the best deal possible. However, by arming yourself with some basic facts, you can find the best mortgage rate for your loan.
Know the Competition
The first step in shopping for the best mortgage rate is to know what is available. The Internet makes comparison shopping much easier than ever before, since you can find a whole host of current rates from a variety of lenders with a single click. It isn’t a bad idea to begin checking current rates weekly, once you have a new loan in mind. This allows you to keep up with both current market trends and fluctuations that might arise. Even if you have your heart set on a particular lender, you can always throw out the lower mortgage rate of a competitor to get your loan officer in a negotiating mood.
Know the Costs of Lending
To make your comparison shopping more accurate, you need to be in tune with the sort of costs that can be tacked onto a stellar mortgage rate. It doesn’t do much to negotiate a lower rate if the points and fees are going to skyrocket as a result. When talking to lenders, you always want to find out whether points are charged to get the rate you are asking for and how much the lender charges to process and close your loan. It is important to factor in these tidbits of information, since a 5% rate that charges 4 points may not be a better deal than the 5.25% with no points after all. And points can be negotiated in some instances just like the interest rate can especially if you know what’s going on at the lender down the street.
Know your Credit Report
It is no secret that lenders save the best mortgage rate for the applicants with the cleanest credit histories. Do you know your number? Every credit report is assessed a number that gives lenders an idea how much risk they are undertaking by offering that particular applicant funding. A credit rating over 700 is usually considered “very good” to “excellent”, while a score between 680 and 700 is considered “good”. Anything less than 680 may make you a higher risk to the lender, which may result in a lower mortgage rate. If you know you have a very good credit report, you can rest assured that you are in the driver’s seat when it comes to negotiating the best mortgage rate.
Whether you are in the market for a new home or looking for a lower monthly payment on a current property, knowing how to negotiate a mortgage rate will make all the difference in the loan you get. Keep these tips tucked under your belt when talking to lenders and you are sure to end up with a mortgage loan you like and can afford.