5 Tips for Finding the Best Deal on Your Mortgage
If you're thinking about getting a mortgage in the near future, you may be surprised to know that your rates could drastically vary depending on certain steps you take or don't take. In general, you always want to pay as little as possible so you can spend the extra money on other things. Here are our five tips for finding the best deal on your mortgage:
#1: Shop Around.
Don't just choose the first lender or the first quote you receive. Different lenders have different standards and comfort levels when it comes to risk, so you will need to ask around to find out what different lenders will assign you in terms of rates. We recommend talking to between three and five lenders for the optimal impact.
#2: Determine Your Length Carefully.
The length of your mortgage will greatly affect how much you're paying on a monthly basis. You should assess your unique situation and use that to make an informed decision on how long your mortgage should be. In general, the shorter the mortgage length, the lower rates you will pay. So, if you're going to live in a house for a few years, it makes sense to take out a mortgage with a lower term length so you can pay less overall.
#3: Review the GFE and TIL.
The Good Faith Estimate (GFE) and Truth in Lending disclosure (TIL) are both documents your lender will have to provide to you during the loan process. Both of these documents will give detail about the lender's best guesses regarding the rates, closing costs, and extra fees. If you review and compare these carefully, you will see where some lenders cut costs and some lenders add fees.
#4: Have Your Financial Ducks in a Row.
In order to receive the lowest mortgage rate possible, you will need to have all your financial ducks in a row. This means that you will need to have an excellent credit score, a stable income with at least two years' worth of employment history, and a low debt-to-income ratio.
#5: Lock Your Rate.
If you do find a low rate but you're still shopping around, don't hesitate to lock in that rate for the time being. This will allow you to keep that rate in case you don't find one that's lower. Most lenders will allow you to do this for 30 days at a maximum.