If you believe every advertisement you see on television, the internet and even in print, then you would believe that every bank has the “lowest mortgage rate,” right? The truth is: some banks offer lower rate mortgages than others and it is possible to find the lowest rate for your new home loan.
Factors That Effect Your Mortgage Rate
Your credit score is the first thing a bank looks at when offering you a loan. The higher your credit score, the better your mortgage rate. If you need to, then talk to a credit specialist and find out what you need to do to raise your credit score before applying. This step might save you thousands over the life of your loan.
The standard down payment for first time home buyers is 20%. If you are putting less than 20% down, you can expect to receive a higher interest rate.
The type of loan you pick will change your interest rate significantly. A fixed-rate mortgage, which offers the same interest rate for the life of the loan, will have a lower rate than an adjustable-length loan, which has a rate that changes after a certain number of years.
Ways to Find the Lowest Bank Mortgage Rates
Shop Around Locally and Offline
One way to find a low rate is to call or walk into a few of your favorite local banks. You’ll give them your credit score, answer a few questions, and they will give you a rate estimate. This is time consuming and you will only be able to compare a handful of banks.
Talk to a Mortgage Broker
A mortgage broker will present your credit score and other qualification statistics to several banks he or she works with. In most cases, if you choose one of the loans offered, an extra fee for the broker will be added to your closing costs. Ultimately, you will have to rely on the honesty of the broker and it will be difficult to know if you got the lowest rate possible or not.
Use an Online Mortgage Comparison Tool
With an online mortgage rate comparison tool (also called a widget), you input your location, down payment, loan amount, credit score, and type of loan desired. You will be shown a list of the banks that have mortgage products available for you. The rates and fees will be listed, as well as the bank’s phone number and a link to apply online. This method is less time consuming and less expensive when compared to the above two options. A mortgage comparison tool from Banks.org is available below.