The best way to ensure you get a good rate on your mortgage is to become an informed buyer. The more you know about mortgages, the more you’ll be able to save, and that doesn’t just mean knowing where to find the best interest rate.
While interest rates play an important role in determining the price of your mortgage, there’s always more to a mortgage than just the interest rate. Here are three things you need to know about mortgages to make sure you secure a favorable rate this summer buying season.
Understand The Fees Involved – And How To Avoid Them
Aside from the interest rate, the biggest factor affecting the price of a mortgage is often the fees involved. These fees won’t always be easy to find, so you might have to do some homework if you want to compare fees charged by different lenders.
Sometimes, it’s possible to have these fees waived or removed. For example, if you end up moving your mortgage from one lender to another, the first lender will often charge some sort of mortgage discharge fee. In many cases, the new lender will be willing to cover that fee as a price for obtaining your business.
Understand How The “Lock-In” Process Can Affect Your Interest Rate
When you get a quote for a mortgage, each lender will offer a “lock-in period” in which the interest rate for their mortgage stays the same. Because interest rates fluctuate so often, this “lock-in period” ensures that you end up paying the same rate you were initially offered should you choose to take out a mortgage with that lender.
If you need a longer lock-in period of two months or more, many lenders will charge a higher interest rate for that provision. For this reason, it’s a good idea to be sure about the closing date of your sale so you can avoid missing out on the lock-in period or asking for an extension.
Understand How Your Credit Score Affects Your Mortgage Rate
Generally, a better credit score means a better mortgage rate, but it’s important that you don’t damage your score while you’re shopping around for mortgages.
Every lender will want to know your credit score and see your credit history. Rather than letting each lender make a credit inquiry, however, it’s safer to request one copy of your credit report yourself that you can show to each lender, as too many inquiries into your credit history can lower your credit score.
Of course, it’s always important to shop around and compare rates when you’re looking for the best mortgage deal. And now that you know these extra pieces of information about how mortgages work, you should have an easier time differentiating between a good mortgage rate and a bad mortgage rate. A mortgage rate that looks good at first could end up being a bad mortgage rate in the end because of hidden fees and other cost factors.
To learn more about finding the best mortgage rates, give your mortgage professional a call.
Lee Gosselin, Co-Founder, Owner & Associate Broker
The Lee Gosselin Real Estate Team
Home with The WILSON Group
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Central Virginia: 804-467-7473 (mobile)
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505 S. Independence Blvd, Ste 208-A
Virginia Beach, Virginia 23452
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Richmond, Virginia 23220