Everyone wants the best rate possible, we all do, we want the best for us and for our family to free up as much money for the important things in life. Yet, when you are shopping for a mortgage, before application, make sure to keep these things in mind that are some of the mistake we’ve seen many borrowers make.
Comparing Mortgage Rates on Different Days
Interest rates change daily, and in some cases change in the middle of the day. If you call Mortgage Company “A” today, and call Mortgage Company “B” a couple days later, you may get rates that are greatly different, without accurate data to make a good shopping decision.
Instead of shopping over a long time frame, try setting aside one day to get information, keeping your eye on financial markets to make sure there was not too much movement, specifically the yield on the 10 year US Treasury. The yield on the 10 year treasury can be found at http://finance.yahoo.com.
Accepting a Rate Quote from a Company you Haven’t Researched
If you call enough places and follow enough leads, at some point, you will get a rate that is, “Too good to be true”. Then, its like the saying, “If it sounds too good to be true…”.
We hear plenty of nightmares from borrowers who have followed a quote from, “Some Guy Home Finance, Inc.” or “I’ve Gotta Guy Mortgage”, and it often ends poorly.
Instead of calling a great number of mortgage companies, try sticking to a short list of reputable home mortgage companies and deciding from that list. By all means, if you haven’t heard of them, make sure to do your homework. If you happen to be unsure of whom you are dealing with, ask the lender for the NMLS number of the company and the loan officer. You can do some research by looking the company and the loan officer up at http://www.nmlsconsumeraccess.org.
Knowing Where You Stand as a Borrower
When shopping for a mortgage, published rates are a starting place. There will be adjustments to the interest rate, based on loan size, credit score, purpose, and many other factors that are tied to risk. If you have a number of risk factors…credit, income, equity, etc., you can expect a higher (moderately) rate that a person who has lower risk factors. Keep in mind, there are no “sub-prime” loans any longer so the crazy ARM terms and negative amortization loans are all gone, so when we talk about adjustments, they are all reasonable.
To conclude, if it is for a purchase or refinance, before you start shopping for a mortgage, first understand your risk factors as a borrower. Second, try to get your list of companies you would entertain an offer from. Third, shop in a narrow window so you can get the best rate possible with the most peace of mind.