Online Mortgage Interest Rates are a common place for many people to start looking when they are thinking of buying a home. With the interest rate in hand then you can calculate a housing payment to get an idea of what price range you can afford. It is also common to look online for interest rates when you are thinking of refinancing your current mortgage. But, are these interest rates accurate or better yet, telling you the whole story?
Mortgage Interest Rates – Many Factors In The Fine Print
You must read the fine print when looking online for mortgage interest rate information. Why? There are so many different factors that go into an interest rate quote such as: loan amount, loan to value, debt to income ratio, credit scores, type of property, purpose of mortgage, length of the mortgage, is the mortgage interest only, fixed or adjustable, escrows or no escrows, cash out or no cash out, etc. As you can see there are a ton of factors that can impact your interest rate.
For many of these factors and many more not listed, mortgage companies can charge little incremental fees to either the interest rates or the points that they will charge you. For example, if you are planning on buying a home with no money down you will likely get a more expense mortgage interest rate than if you were going to put 20% down on your new home. You can think of it this way, each little factor can either add or take away a little bit of risk to your loan. Risk in this case refers to the risk that a bank is going to determine about lending you money for a mortgage. As the risk for your loan is increased, you will get charged more and vice versa as you take some risk away from the loan.
To Get The Best Mortgage Rate – Pick Up The Phone
If you are shopping for the best interest rate you need to pick up the phone and talk to someone. Perhaps you are going to give your loan information to LendingTree.com over the Internet. There’s nothing wrong with doing this. Their service is fast, dependable, and secure. You might get a rate quote emailed to you with a lender’s contact information. You may get a phone call from a lender about your information. In either case, you definitely need to speak to someone about your personal financial situation.
Every person on the planet’s financial and credit situation is different. Do not get sucked into listening to and comparing yourself to your neighbor or your best friend who says they got this rate with no points etc. It is impossible to compare situations for many people. One simple example might be that while your friend works as a computer programmer for a major company in your town, he is a hired consultant and pays his own taxes. This would potentially impact how he qualifies for a loan. With just this small difference your rate quote and his could be dramatically different.
Get Interest Rate Quotes From At Least Three People
Now that you have decided to get interest rate quotes, get them from three people. Why three? Three should be enough to give you a good idea what your rates are going to be. Make sure that you get each loan officer to give you a good faith estimate showing you your costs and the interest rate that they are going to charge you. You can use the good faith estimates to compare your offers. The other extremely important thing to do is to tell each loan officer the exact same things. If you tell one loan officer that you are going to get gift money but another doesn’t ask you probably won’t get equal quotes. See Questions You Should Ask A Loan Officer.
Get Quotes On The Same Day
This is a very important thing to do also. If you don’t know this already, mortgage interest rates change everyday. Sometimes 2, 3, or even 4 times in one day. It is highly likely that if you get quotes from two different people, one person one day and the other the next, you won’t know who has the best rate. It is like comparing apples and oranges.
Stay Away From The Best Mortgage Rate Offers
I’ll say this in very short fashion – No One Has the Best Interest Rates All the Time! It is impossible to make this claim. Mortgage companies get their loan information from a variety of investors. Investors change their appetite for the number and types of loans they want to invest in all the time. The investors will change how they bid for a mortgage based on the interest rates that they are willing to give to get certain loans. These interest rates are passed through your mortgage company onto you. The mortgage company will mark them up some to make their money.
An investor who doesn’t a particular type of loan or wants to slow down their investing volume all they have to do is raise their interest rates. When this happens the company who was offering the Best Interest Rates doesn’t have the best anymore.
So the next time you start looking online at mortgage interest rates, make sure that you speak to someone on the phone; tell everyone the same things; and get good faith estimates so you can compare offers. The Internet is a great place to start your home buying journey, but you’ll most assuredly want to trust but verify the information that you find out there. Good luck and happy house hunting.
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