Tips for Finding the Lowest Mortgage Rates in Your Area

Tips for Finding the Lowest Mortgage Rates in Your Area

By: Barbara Delp

Your mortgage rate can play a big factor in how much money you have left over at the end of the month, so making sure you get the best rate possible is essential. Remember: most homebuyers will have their mortgage for many years. Ensuring your mortgage rate is the lowest you can achieve can have a major impact on your budget and your financial health over the years.

But how do you go about finding the best mortgage rate in your area? The following guidelines will offer a few tips and pointers you can use when looking for your next mortgage lender.

You’d better shop around. Just like the song says, when looking for a mortgage rate, shop around to find the best deal possible. While most individuals have become accustomed to the idea of haggling over some things – yard sale prices or the cost of a car, for example – many potential homeowners are unaware that they can haggle for a better mortgage rate, too. Unlike a yard sale trinket that might result in a few dollars of savings, getting a lower mortgage interest rate literally can save you thousands of dollars over the life of the loan. If you get an offer from one lender, don’t hesitate to reveal that rate to another lender to see if they are willing to beat it. Banks and other lenders are in the business of making loans. Most are willing to negotiate to some degree on the rate or terms of your loan in order to "make the sale."

Look around online. The Internet is a great source of loan information, and an ideal place to get lenders bidding for your business. Even if you prefer to deal with a local lender who doesn’t have a big online presence, it’s still a good idea to see what the competition is willing to offer you to get you to sign on the dotted line. Once you have offers in hand, you can use these as bargaining chips when you’re dealing with the lender of your choice.

Think big. Many individual banks – especially small, local banks – have more restrictions in what they can offer you. Larger, more diversified banks and financial institutions that do a lot of business in mortgages can often offer better rates than local lenders, because they have a larger pool of lending sources from which to draw. Unlike smaller, local banks, larger banks and financial institutions can draw from a global market of potential vendors to get you a very competitive mortgage interest rate.

Be neighborly. When considering a lender, ask neighbors, friends, co-workers and relatives – anyone you feel comfortable asking – who they used for their mortgage and what their experiences were. The more sources of reputable information you have to consider, the better your chances are of securing a low mortgage rate.

Other options to sweeten the deal. When you are sure you’ve reached the lowest interest rate possible, there’s still room for savings – sometimes significant savings. The mortgage closing process is similar to the home closing process. Like the home closing process, your mortgage closing will involve numerous fees which some lenders use to intentionally pad the bottom line – and their fee or commission. Even fees like copying or faxing documents or using an overnight courier when standard mail would suffice can be included in your mortgage, and many of these fees are negotiable and can be cut out entirely. Before your closing, ask to see a copy of the closing documents (it’s your legal right) and make a list of all the fees. Call your lender and go through them one by one to see what can be cut out. This is NOT the time to be shy: your lender can "taste" the deal, and this is the time when they are most likely to cut out unnecessary fees.

No-cost may be no good. Understanding that homebuyers are becoming savvy to unnecessary fees, some lenders may offer a no-fee mortgage that charges no additional closing fees. But beware: these fees are often incorporated into higher interest rates, meaning your lender will make those fees – and more – over the life of the loan.

Rate isn’t all there is. Sure, the mortgage rate and terms are two really important aspects of the mortgage process. But don’t forget customer service. While you’re calling around and emailing lenders to find out what they can do for you, make note of how responsive they are o your inquiries and your individual needs. Also be sure to make a note of how they treat you; this is an entity you’ll be dealing with for a long time, so you want to make sure you feel comfortable and happy dealing with them.

The mortgage process can be confusing – even overwhelming at times. Be sure to take the time to review your offers thoroughly. With a little time and effort, you could end up with thousands of dollars in savings over the life of your loan.

Barbara Delp is a freelance writer who writes about real estate and how to work with a mortgage lender .

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