To most people, getting the “best mortgage” means finding the right home loan product and then getting the best deal on that loan. This involves several easy steps:
Learn about the types of loans available, and choose the right one for you. This is important because getting the best deal on the wrong loan could cost you a lot of money. For example, suppose you’re buying a home that you expect to sell in three years (the average first-time homebuyer in this country keeps that home for just about three years, so this is not a far-fetched scenario). You spend days comparing quotes and go back and forth with several lenders to get the lowest rate on a 30-year fixed loan. Your rate is 3.95 percent. But you could have selected even an average rate on a 5/1 loan, which is fixed for five years, and paid about 2.95 percent, or a 3/1 loan, fixed for three years, and paid about 2.5 percent! Depending on your loan size, the difference over three years could be like getting a new car — for free.
Gather and compare mortgage quotes from several competing lenders. Mortgage costs vary a lot between lenders — as much as two percent for the same loan. Spending an hour or so comparing quotes could save you many thousands. Who wouldn’t like to earn thousands of dollars in a single hour?
Select a couple of “finalist” lenders to interview. Asking the right questions helps you find the lender you can trust to help you make the right decisions and close your loan smoothly. A low rate is not good if you can’t close your loan.
Apply for your loan. Knowing what qualifications you need helps you avoid a lot of stress and can even save you money. A pre-approved mortgage puts you in a much stronger bargaining position when buying a home, and that may get you a lot more respect from sellers, and a better price too.
Lock in your interest rate.Knowing when to lock in your interest rate (and when NOT to!) can help you close your mortgage at the best rate available.
Close your loan! Closing can be stressful, but knowing what to look for lets you avoid last-minute hassles and heartaches.
We’ll walk you through these steps, and at the end you’ll be ready to choose, apply for and close your loan.