The Best Home Mortgage Rates
Ah, the Holy Grail. You’ve been tasked to find the best home mortgage rate. Easy, right? Aren’t all those companies that advertise on the radio and the internet just a phone call away? But wait a minute…which mortgage? And for that matter…which rate?
That’s right…which rate. In fact, the very same home mortgage can have more than one interest rate available on any given day. How can that be?
Home mortgage rates can vary not just from lender to lender but can also vary from the same lender for the very same program. A lender can offer a 30 year fixed rate mortgage at 3.50%, 3.625%, 3.75% and so on. Yet the lender really doesn’t worry about which rate you choose, from a financial standpoint.
What we care about is that you get the best rate for you and that your needs are met. We offer valuable advice and it is up to you as to which route you take.
You’ve heard of the term “discount points” or simply “points,” right? A point is represented as 1% of the loan amount. On a $300,000 loan, one point equals $3,000. It’s also called a “discount” because a point should discount the rate, generally by 1/4% for each point paid.
Points don’t have to come in single percentage point increments. A lender might charge ¼ of a point or ½ of a point. Using the same $300,000 home loan listed above, ¼ point would result in $750 to the lender and ½ point would yield $1,500. And just as one point can discount a rate by ¼% in most instances so can ½ point discount the interest rate by 1/8%. Conversely by paying two points a lender could discount the rate by up to ½%.
At Poli Mortgage we encourage you to take the best rate with no points or closing costs.
But still, the choice is entirely yours.
So how do you find the best home mortgage rate?
First, understand that rates for 30 year fixed rate home loans and adjustable rate mortgage loans will be different. As will rates for so-called “hybrid” loans which are fixed for a few short years then change into an adjustable rate mortgage. Don’t search for the best rate for all mortgages, it doesn’t work that way. Instead, determine which mortgage you’re going to research and then go shopping.
The most popular mortgage is the 30 year fixed rate home loan yet the 15 year fixed rate mortgage is becoming increasingly popular due to the historical low rate environment we’re enjoying. Either way, decide your program before picking up the phone.
Finding the best home mortgage rate can be an eternal quest for some. The consumer is constantly looking at yields, combing for economic data and researching historical interest rates looking for trends. Yet what most consumers don't realize is this: mortgage lenders issue their daily mortgages rates on the very same index. That’s right: mortgage lenders issue their best mortgage rates on the very same index.
That’s why you won’t find one lender offering a 30 year fixed rate at 2.00% while everyone else is offering 3.00% for the very same program. At least without a whole lot of discount points or lender fees thrown into the mix.
When shopping for the best mortgage rate, establish a level playing field by establishing a standard. Obtain quotes with just one discount point over a 30 day period and for the same loan amount. Your phone call should go something like this:
“Hi, what is your best 30 year fixed rate for a $300,000 mortgage with one point to cover a 30 day period? Also, please include your lender fees.”
The loan representative on the other end will also ask you how much you intend to put down (20% or more gets you a better rate than 5% down) and about your credit profile (credit scores above 740 get a much better than scores of 620). Lender fees will include charges the lender charges directly, not third party fees from appraisers, attorneys or credit bureaus.
Once you get your rate quote, move on to the next lender. And make certain you make your phone calls at around the same time of day to take into consideration market fluctuations that may occur.
You’ll find that most lenders will be very close in rate and if you have two or three lenders who are quoting the same rate, the next milestone is the lender fees being quoted. The lender with the lowest rate with the lowest fees wins. And when the lender wins, you win!
One final note: Be sure and ask how you can lock in, or guarantee your rate. A rate quote over the phone is no good until you receive your lock-in agreement.
So get your ducks in a row. Dig out your pad and paper. The quest for the best home mortgage rate is about to begin…and you indeed are very close to the best home mortgage rate on the planet.
This is quite simply, what we do, Rates. Integrity. Service.