Shopping for a better mortgage rate is essential for anyone looking to purchase a home or refinance their existing mortgage. A small difference in interest rate can save you thousands of dollars over the life of your loan. Here are some steps you can take to increase your chances of getting a good rate, while also avoiding unwanted spam phone calls and emails.
Check your credit score
Your credit score is one of the most important factors that lenders consider when determining your mortgage rate. Make sure to check your credit score and address any errors or inaccuracies that may be affecting it.
Compare rates from multiple lenders
Don’t just go with the first lender you find. It is essential to reach out to at least 10 mortgage lenders for quotes. This will give you a good idea of the range of rates and fees available in the market, and you will be able to compare them to find the best deal.
Get pre-approved
Getting pre-approved for a mortgage can give you an idea of what kind of rate you can expect to receive. It also shows sellers that you’re a serious buyer.
Consider a shorter loan term
A shorter loan term, such as 15 years, can get you a lower interest rate. However, you will also have to pay more each month.
Make a large down payment
A larger down payment can lower your mortgage rate, as it reduces the amount of money you’re borrowing.
Look for government programs
Government programs, such as the Federal Housing Administration (FHA) and Veterans Affairs (VA) loans, may offer better rates for certain borrowers.
Shop around for closing costs
Closing costs can vary significantly from lender to lender. Be sure to ask about them when comparing rates.
Be prepared to negotiate
Once you’ve found a lender with a good rate, don’t be afraid to negotiate. Ask if they can do better or if they can match a rate you’ve found from another lender.
Lock in your rate
Once you’ve found a rate you like, ask your lender if you can lock it in. This will protect you from rate increases while you’re going through the loan process.
Look at the APR
When comparing rates, make sure to look at the annual percentage rate (APR) rather than just the interest rate. The APR includes all the costs associated with the loan, including closing costs, which can give you a more accurate idea of the overall cost of the loan.
Know their tactics
When you talk to lenders, a common tactic they employ is to have you talk to them on the phone, spend time and energy on them, in a way that you get drained and feel (directly or indirectly) pressured to use them. Often, taking to a lender entails running a credit check, which could eventually affect your score. While a large number of credit checks in a short period of time for mortgage shopping may count as just one or two checks, there is no need to file full applications of credit (and run the credit checks) until you’ve narrowed it down to 3-4 potential lenders.
Use a template
I personally use this template when shopping around, and send it to as many lenders as I can, then decide from their responses which top 3-4 of them I will do a full application with. Feel free to use it, customize it to your situation and send it out.
Manage your communications, avoid spam
To avoid unwanted spam phone calls and emails, it is essential to create a phone number (many services out there offer you just that) and email address specifically for shopping for a mortgage. This will help you keep your personal information private and will also make it easier to filter out unwanted communications.
When providing your contact information to lenders, make sure to ask them how they will be using it and opt-out of any marketing communications if you prefer not to receive them. You can also use the national do-not-call registry or the national do-not-email registry to prevent telemarketing and spam emails.
Conclusion
In conclusion, shopping for a better mortgage rate can save you thousands of dollars over the life of your loan. Make sure to reach out to at least 10 mortgage lenders for quotes, and compare rates, terms and fees to find the best deal. Remember to keep your personal information private by creating a new phone number and email address specifically for the purpose of shopping for a mortgage. And, be aware of your rights to opt-out of unwanted marketing communications from lenders.
