How Do I Shop for the Best Mortgage Rate?
Everybody wants the lowest interest rate. After all, most consumers assume that the lower the interest rate, the cheaper it is to borrow money. The truth is , the lower your interest rate, the lower your payment is, not necessarily the cost to borrow money. The cost of borrowing is based on how long you intend to keep the loan, and the cost of obtaining the loan.
A loan with a higher interest rate with lower costs may be cheaper if you intend to pay it off early. Just because you're taking out a 30 or 15 year mortgage doesn't mean you will keep that loan for the entire term. Most mortgages are paid off within seven to ten years when the home is either sold or refinanced. So, once you understand this concept, you begin to focus on shopping for the best loan and not just the lowest interest rate.
In the end, the best loan is defined as a loan which provides you with a maximum benefit based on your specific needs.
So, now that we understand the difference between loan costs and loan interest rate, how do we shop for the best interest rate? First of all, the best rate, is defined as the lowest rate available based on your loan parameters at the time you will be financing your home. The best rate is not the same or lower rate that your Uncle Bill received yesterday. You see, rates differ based on terms of the loan and property types. Rates can also change daily, and this doesn't mean that the changes are three percent one day and five percent the next, but rates can move in eights and quarters depending on the markets.
You should also be aware that interest rate advertisements that you see on the Internet, TV, and especially print, can be outdated. To grab people's attention, many of these advertisements feature 15 year terms because of the attractive interest rates, or 30 year terms with points or origination fees. So, be sure to always read the fine print.
To sum all this up, As long as you're dealing with reputable lenders, interest rates should not vary greatly if comparing on the same day. The right lender should be able to provide you with easy to understand options so you can determine what makes the most sense for you.
Interest rate is certainly important, but a competent and honest mortgage lender is priceless.
If you have questions about interest rates, give me a call. Don Anfuso, your Mortgage Pro for Life.
Client Testimonials
- "This is now the third time in eight years I have worked with Don. Every time is easier than the last if that was even possible."
Kevin Alcott“As first-time homebuyers, we were hesitant and questioning a few things, but Don was always available and willing to answer any questions we had.”Nick Mattia“He told me what I needed to do and told me if I did it I would be in a house in 8 months and he was absolutely right.”Ryne Barry - "Don was always available when I had questions or doubts, was completely transparent and helped me make some very smart financial decisions."
Kate Lewis“As first-time homebuyers, Donald and his team made the process smooth, easy and fast! Always available to ask questions, even after work hours!”Renata Clasadonte Iannitelli“His honesty, consistent follow-up and advice were invaluable in our process and made us feel comfortable trusting this major milestone in his hands.”Anthony Loffredo - “He was clear and transparent in his every move and it was a fairly smooth process. He even sent a lovely housewarming gift that we adore. ”Kathy Capozzi“The process was seamless and Don was available to answer all of our questions timely and thoroughly. ”Jessica S."Don helped us buy and refinance our first house and was an invaluable asset as we navigated those complicated waters for the first time."G. Dicrosta
