BMI Federal Credit Union
Shopping the Mortgage Rates Market
6 Helpful Tips
Buying your first house is an important first step in any person’s life, and can also be the most confusing. Between realtors, closing costs and down payments it can seem like an overwhelming maze of paper work and numbers. But with a few helpful tips on shopping the mortgage rates market, we can help make the process just a little bit easier.
- Get your credit score. This should be the first thing you do before anything else. Not only does knowing your credit score in advance help you determine if you’ll qualify for a loan and what rate you’ll be charged, it also gives you time to improve it if your credit has been less than stellar. Just know it can take months to see any improvements in your score, so don’t get discouraged if you don’t see a change right away.
- Talk to several different lenders. Rates vary from lender to lender, so doing some research will help you determine whether you’re getting the best rate possible. Ask each lender for a list of their current interest rates and whether those rates are fixed or adjustable. If the lender has adjustable rates, ask how your rate and loan payment will vary.
- Rates change constantly. Rates are constantly fluctuating, and can even change in a single day. To make sure you’re getting the most accurate rate comparison, try to contact all the lenders on the same day at around the same time.
- Look around for points being offered. Points are fees paid to the lender for the loan and are typically tied to the interest rate. Usually the more points you pay, the lower your rate. Ask your lender to quote you your points in dollars rather than numbers, so you’ll actually know how much you’ll be paying.
- Lock in your rate. Once you find a mortgage that you’re happy with and get pre-approved, ask the lender to lock in the interest rate and provide written documentation of how long it will be locked before it expires. Locking in your rate means that even if the rate rises within the documented time, you will still receive the original rate that you locked in.
- Negotiate fees wherever possible. There are necessary fees that come with getting a mortgage such as title fees, courier fees and recording fees. But knowing which fees are set in stone and which are negotiable can save you a bunch of money in the long run. Fees such as origination fees, underwriting fees and application fees can all be negotiated with your lender. Always ask, because pinching a penny where you can will save you a lot of future hassle.
While buying your first house can be daunting, it’s also a new and exciting time. Put some of these tips to good use and you’ll be moving into your new house in no time!