How to Shop for the Best Mortgage Rate

Get a favorable mortgage rate.
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No homeowner wants to pay more for a property than absolutely necessary, but in hasty attempts to get that dream home, some people end up doing just that. When planning the financing for your new nest, exercise caution and move slowly through the lending process to ensure that you end up with the mortgage with a favorable rate. While shopping around for a primo mortgage rate may take a bit of time, doing so is well worth the effort, as it can make a major difference in terms of your financial bottom line.

Step 1

Gather information from several potential lenders. Visit several area and national banks and inquire as to their mortgage offerings. Provide them with information regarding your financial situation, and ask them to give you details about their best mortgage deals.

Step 2

Explore an assortment of terms. Don’t necessarily commit to a 30-year mortgage right away; instead, ask whether a 25- or even a 15-year mortgage could earn you a better interest rate. If it could, and you can swing the higher monthly payments, consider it.

Step 3

Ask lenders to make you their best offer. Instead of telling lenders specifically what you are looking for, ask them to give you information about promotions they are running. Even though these promotions might not have the terms you initially desired, you may be able to get a honey of a rate if you are flexible.

Step 4

Consider the benefits of both adjustable and fixed mortgages. You can often earn a slightly lower rate on adjustable rate mortgages (ARM); however, your rate is subject to change over the course of the loan term. Before jumping on one of these non-fixed options, consider whether the rate savings is worth the risk associated with an ARM.

Step 5

Complete the Federal Reserve’s Mortgage Comparison Worksheet (see Resources). Make comparing mortgage terms a bit easier by placing the mortgages you are considering next to each other.

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