- March 24, 2015
- Category: Latest
Buying a home is probably the single biggest financial commitment you will ever make, and certainly one of the longest lasting. Whether you choose a 15-year or 30-year loan, you will be living with the consequences of your mortgage shopping decision for decades. Making a wise decision will pay off year after year, while choosing a poor mortgage product will haunt you throughout the life of the loan.
There are a number of ways to make the mortgage shopping process less mysterious and less stressful. The more you can learn about how mortgages work and how rates are set, the better off you will be. An educated consumer is a formidable force in the mortgage industry, and being educated will help you sort out the great deals from the rest.
Know Where You Stand
It will be hard to get the best mortgage interest rate if you do not know where you stand financially. Before you attend your first open house or start shopping for a mortgage, you first need to check your credit report and get your credit score.
Getting a copy of your credit report and credit score is not difficult, but it is important to watch out for scams. All consumers are entitled to a free copy of their credit report once a year, so there is no need to pay a fee or sign up for a costly credit monitoring service.
Once you have your credit report in hand (or on the computer screen), go over each section carefully and make sure all of the information is correct. Notify the credit reporting agency immediately if you spot an account you did not open or an inquiry you did not authorize. These could both be signs of identity theft.
When it comes to your credit score, you might be able to get the information you need right from your bank or credit card company. A growing number of banks and credit card issuers are including this important information on their monthly statements, allowing consumers to keep tabs on their credit profiles and track their progress.
Research Prevailing Rates
Interest rates change every day, and that can make recognizing a great mortgage rate difficult. You can get a jump on things by researching rates and keeping tabs on the fixed-income market. Financial newspapers like the Wall Street Journal and Barron’s are good sources of information, as are websites that follow the movement of the stock market and other financial issues.
You can find lists of prevailing mortgage rates at all of these venues, and you can use that information to estimate the rate you should expect to pay. Keep in mind that the most favorable mortgage rates go to borrowers with the best credit scores. That is why the previous exercise of checking your credit report and getting your score were so important.
Shop Around
It might sound like a cliché, but one of the best ways to get a low mortgage interest rate is to simply shop around. It might be tempting to start and end the search at your local bank, but if you do not shop around you will never know what is out there.
Check out mortgage rates at local banks, national banks, credit unions and mortgage brokers. You will probably discover a range of rates, and shopping around for the lowest rate can save you a lot of money.
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