How to get the Best Mortgage rate can be a very important financial decision when buying a new home. The best mortgage rate and a good term on your loan can save you lots of money over time. Getting the best mortgage rate can be one of the most intimidating parts of buying a new home, but it doesn’t have to be. One of the best ways to find the best mortgage rate is to arm yourself with knowledge. Sites on the Internet dedicated to comparing mortgage rates, and informational books.
How to get the Best Mortgage rates are largely determined by the buyer’s credit score, the median market rates, and the amount of down payment you are willing to make on your home. One of the best ways on how to get the best mortgage rate is by shopping around to get different estimates. Just getting the lowest rate doesn’t always mean it’s the best deal. Knowing what rates are available and educating yourself about the kind of rates that you qualify for can be a valuable tool to finding a good mortgage rate. Don’t be afraid to check out more than one lender. Also make sure you know all the hidden fees that may be involved or added on to your mortgage.
Ask for a Good Faith estimate from your Broker or Lender. Look at the APR. APR stands for Annual Percentage Rate. The closer this is to your Interest Rate the lower the fees are that are associated to the loan. The higher the APR, the higher the fees are that are associated with your loan. Don’t be afraid to have a Mortgage Broker or Lender compete for your business. In today’s market, they are hungry for any business they can get. If you are working with a Mortgage Broker then they have to disclose how much money they are making on the loan through your interest rate. This is call YSP and that stands for Yield Spread Premium. This is the amount of money the Broker will receive from their Investor for sending them your loan. Don’t be afraid to ask your Broker what the YSP is. The higher the YSP is the higher your rate is. This can be negotiated. Always ask what their “PAR” rate is. The Broker’s Par rate is the rate that their Investor is giving them that doesn’t pay any additional monies in the rate. This insures that you are getting the lowest rate possible. Don’t forget, request a “Par” rate.
So how do you know if you are getting the Best Rate from your Mortgage Broker? It’s simple, have them provide you a copy of the Good Faith Estimate. Lenders and Brokers are required by law to disclose it to you within 3 days of the Loan Officer taking your application. Make sure they do this. The YSP will be paid in what they call P.O.C., this means Paid Out of Closing. It will be paid from the Lender to the Mortgage Brokers Company. Typically they make 1% of the loan amount for every .5% they increase your rate from the “Par” rate. For example: Let’s say the “Par” rate is 6% and your Loan amount is 200,000 dollars. If the Loan Officer tells you your rate is 6.5% then the company would make approximately make 2,000 dollars. If they told you your rate was 7.0% then they would typically make a full 2% in Yield Spread Premium. Which on 200,000 would be a total of 4,000 dollars.
Now, this is very important, no company works for free, so they have to make a profit in order to close your loan. This doesn’t mean that going to a Lender is always better either. Keep in mind when working with a Lender, the Lender’s typically don’t have the ability to shop your loan with several other Lenders like a Mortgage Broker does. It’s the Lenders program or No loan. Now, with Lenders they don’t have to disclose what they are making in your rate, so Shop around as much as possible. Obtain a Tri-merge credit report with your credit scores and shop that way. Do not let everyone pull your credit when shopping for a loan, allowing them to pull your credit every time will lower your credit scores.
Make sure you know all the details about your mortgage rate and your interest rate. Particularly you want to know whether the APR interest rate is fixed or variable. A fixed interest remains stationary over time, so that the percentage of interest and your monthly payments never change. A variable interest rate can change with the changing economy as much as annually or as little as once every three, five, or seven years.
When shopping around on how to get the best mortgage rate, getting an appraisal of the home you’re buying can help you get a sense of the value of the home. In most cases, the Lender or Broker you decide to work with will order this for you. In most cases you will have to pay for this up front. This is typical. As you make mortgage payments, you begin to establish equity. Equity is defined as the difference between the amount you owe on your house and the amount that your home is valued at. Equity can be a valuable financial resource when it comes to unexpected expenses.
Raising your credit score can be an important part of getting a good mortgage rate. To find out what your credit score is (for free) logon http://www.toBuyThatHome.com
Here are some simple tools, such as paying your bills on time can boost your credit scores. Internet companies can offer quicker ways to increase your credit scores. Just a little research on the Internet can give you great ideas for helping your credit rating, which can save you thousands of dollars on your interest rates. Owning a home is good for your credit, especially if you pay your mortgage payments on time. Having good credit and good equity can also be beneficial when it comes time to refinance.
To get more vital information on how to get the best rate, visit http://www.BuyThatHome.com
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