When you’re searching for a home loan, it’s critical to compare mortgage rates. Here are three tips to get you started on the right foot.
Think like a lender
When you compare mortgage rates, you’ll find that you’re likely to get a range of quotes. To get the best price, think like a lender by examining these five factors:
- Your credit score. The higher your score, the better.
- Will you live in the home? Borrowers who are buying homes as investment properties always pay more.
- What’s your area like? While loans can be funded from anywhere, the price you pay has a lot to do with real estate in your area. So be aware of interest rates in your state when determining if the quote you’re being offered is a good deal.
- If you’re shopping for a jumbo loan (defined as more than the conforming loan limit in your area), be prepared to pay more.
- Consider paying points. If you’re willing to put more money down, you can literally buy a lower interest rate.
When you compare mortgage rates over time, there’s a good chance you’ll see some fluctuations in the market. If you’re planning to buy soon, or if you’re worried that even a slight uptick will hurt your chances of owning a home, it’s a good idea to consider locking a rate. Rates can be locked between 30 and 90 days. But remember, if you lock and the rate goes down, you will end up overpaying.
To compare mortgage rates, it’s a good idea to speak with multiple brokers and lenders. Financial advisors recommend that borrowers speak with at least three lenders or brokers to get the best deal.