Finding the Best Mortgage
Loan Rate
Written By Ellise Walsh
Mon 3/21/2005 3:20 PM
Buying a home may be the most important financial decision you will ever
make. Buying a home is an important decision, and most homeowners will be
carrying their mortgage debt for decades. For this reason, even a small
difference in your interest rate will make a huge difference in your monthly
payments, and in how much you pay over the life of the loan. The information
below can help you make sure you get the best possible mortgage loan for
your needs.
There is no question that shopping for a mortgage can be a daunting process.
There are many things to consider when shopping for a mortgage and many
pitfalls to avoid. There are a great many options available when shopping
for a mortgage. There are 15-year loans, 30-year loans, fixed-rate
mortgages, variable-rate mortgages and even interest only mortgage loans.
Advance planning can make a big difference and save you a lot of money down
the road.
What is the first step in shopping for the best mortgage loan rate?
A good first step to take before shopping for a mortgage loan is to get a
current copy of your credit report. Your credit report and credit score will
determine how much money you can borrow, and, most importantly, what your
interest rate will be. Having a good credit rating will help you to get the
interest rate on your mortgage loan.
How can I get a copy of my credit report?
You can order a copy of your credit report by visiting the websites of the
three major credit-reporting agencies. It is a good idea to obtain a copy of
your credit report from all three major credit-reporting agencies � Equifax,
TransUnion and Experian. An inaccuracy in your credit report could cost you
thousands of pounds from a higher than necessary interest rate, or even
cause you to be turned down for a loan. A recent survey by a consumer�s
rights organization found that up to 50% of credit reports contain errors,
so it is a good idea to review your credit report before shopping for a
mortgage. Knowing what is in your credit report is a good first step when
shopping for the best mortgage interest rate.
Know what your bank knows � know your credit score.
Knowing your credit score will give you a huge advantage when shopping for
the best mortgage loan rate. Your credit score will determine everything
from your interest rate to the terms of your loan. Knowing your credit score
before you begin shopping for a mortgage will give you a big advantage when
dealing with lenders.
How can I obtain interest rate information?
There are many web sites on the internet where you can find accurate, timely
information on interest rates. A good place to start is www.bankrate.com.
This website can help you compare mortgage rates in your area and find the
best rates available nationwide. Remember that the interest rate you are
offered will be affected by your personal circumstances and your personal
credit rating. Having a good credit rating will be a big help in finding the
best mortgage loan rate.
Lay out the information.
Once you�ve begun shopping for the best mortgage loan rate and you have
several offers from different lenders, lay them out side by side and compare
the terms. What is the interest rate? What are the up front costs? Are their
points involved? Look at each offer and compare the costs and benefits. Make
sure you�ve found the very best deal before you sign a home mortgage loan
agreement.
Is a fixed or variable rate mortgage best for me?
Choosing between a fixed or variable rate mortgage is one of the most
important decisions mortgage shoppers will need to make. This choice will
largely be dictated by what you think will happen to interest rates. If you
are convinced that interest rates will rise, it is a good idea to lock in a
fixed interest rate. If you think rates will fall, you may want to go with a
variable rate mortgage. Be aware of the interest rate cap, however. Make
sure you can afford the monthly payments even if interest rates rise to the
highest rate possible.
