You’ll need to contact a lender to get your credit scores. You should share your credit scores with other lenders rather than letting each one you contact pull your credit history, because multiple inquiries could lower your scores.
Be prepared to answer the following questions before a lender can provide an accurate mortgage rate quote:
- How large is your down payment? Interest rates vary according to your loan-to-value ratio.
- Are you buying a single family home or a condominium? Purchasing a condominium with a loan-to-value ratio above 75% may impose additional costs.
- Are you refinancing or purchasing? Interest rates may be higher on a refinance, especially if you are taking out cash.
- Do you intend to waive escrow and pay your taxes and insurance yourself? Your mortgage rate could be one-eighth of one percentage point higher because that’s considered a riskier loan.
- How large is your new loan amount? Are you above the conforming limit of $417,000, what about above the high balance conforming limit in your county, do you know what that is? Your trusted lender will be able to walk you through all of the differences with the loan amounts and terms.
Plan for Best Rates
Establish a baseline. Get a referral from someone you trust and contact the recommended lender to obtain your credit scores and discuss your loan options. Your lender can help you compare FHA and conventional financing, as well as various loan terms, so you can make an informed decision on which loan program and terms you want to help you compare.
Decide when you want to close. The length of your lock-in period will impact your mortgage rate, so discuss your target close date with each lender and ask about the charges for different loan-lock periods.
Ask about fees. The variation in fees associated with a loan are one reason why you shouldn’t comparison shop solely based on the best advertised interest rate. Sometimes a mortgage at a lower advertised rate can end up costing you more because of all the fees associated with it.
Consider whether you should pay points. One of the largest expenses can be the points attached to a particular loan. Each point is equal to one percent of your loan amount.
Call lenders on the same day. Because mortgage rates fluctuate constantly, you should call lenders as close to the same time as possible on the same day to compare rates. But beware, it’s not all about price! Don’t forget the old saying, you get what you pay for!
It’s important to receive both great service at a fair and reasonable price.