“What is today’s best mortgage rates?” A Client asks via phone call. This question is commonly heard by mortgage brokers or mortgage specialists. Not long after the mortgage broker gave an answer. He said, “Today the best interest rate is 4%”. Getting a mortgage with the lowest interest rates is what the first time buyers are looking for.
Then they go off and find the house they like. The client said, “Ok, let’s go with a 4% rate!”. But the broker said “This is my best rate. But that doesn’t mean this is the best rate for you or for this property. Or for whatever the conditions are.”
When you come to the bank they give you a choice of packages or products. This package is an interest rate. Every bank has different packages. On a daily basis, the percentage of interest rates changes. Therefore, if you go to the best lender now it doesn’t mean they are the best for tomorrow. High or low demand, supply, and competition make the market dynamic. This is what causes interest rates change every day.
Now the main point is why don’t you always get the best rate?. Well, the reason is that every bank has it’s own market share. They don’t target the same people. The fact is most people don’t know about this. They think the bank is targeting all circles. Even though they have ads that show families with big smiles because they get a mortgage. But it’s not the case.
Understand Factors That Can Affect the Mortgage Rates
The following are factors that can cause a high or low mortgage interest that you get as a first time home buyer.
Where is the location of the property? Whether in the rural area, in the city, or even in the boonies. If you know, credit unions can be the best in this situation. Because they will only fund property located in the same area in one of their branches. Not many people know about this.
Therefore the location of property becomes important for them. Note that if you have some properties in a specified location they will not fund it. Every bank targets people differently. Many banks don’t want land, or places with weathered houses, or designs with pipe knobs and tubes, and so on. So not all banks want certain properties.
What is your credit score? If you have a score above 680 it’s very good. Mortgage brokers might be able to put lenders based on that number. How about below 680? The possibility of a score of 650 to 680 is that most lenders agree on that score. But what if your credit score is below 650 or even below 500? You need to know in this case there are different levels or tiers.
So if today’s best rate is 4% for a score of 680 and your score is below that number then you don’t qualify for the best rate. Every bank has its own policies. So you can’t always get the today best rate. Therefore you come to a mortgage broker and they will give the best rate based on your current situation.
They will see the situation and property. Where is the property located? Based on income, whether you are an employee or have your own business. From here they can find out, choose and try to get the best lender for you. The broker’s mission doesn’t always get the best lenders but also how to get your deal done.
In addition, as a borrower, you must know about the products offered by mortgage brokers or banks with their best interest. You must understand whether it is a fix or variable. If it’s fixed then how long is it fixed. Similarly, if it is a variable. Maybe you don’t know if the variable comes in terms.
Then you also have to ask about the prepayment option. Is this transferable and how is the penalty calculated? Remember this question is very important for you to ask, whether it’s when you buy a new home for the first time or financing.
In the end, you have to understand your real situation. Because it doesn’t always fit the requirements of the lenders. Therefore mortgage brokers play a role. They will know your current situation and they will find the best lender who can approve it.
Tips to Get the Best Mortgage Rates
Well, to get the best rate you have to choose a law officer you trust. They must know what they are doing. Because this is the most important thing. You can go to three lenders for this purpose. You can go to a bank or unions credit, or to a mortgage broker.
Whatever it is, here you have to give them all the exact same information. Then you can contact them on the same day and time. Why? Because interest rates change every day. Depending on what happened on that day.
You can just contact one company in the morning. Suppose 9 o’clock in the morning. But maybe they haven’t got the interest rate information you’re looking for. Therefore, you can call all of them in the afternoon around 1 or 2 o’clock.
You only need to know their interest rates at the same time. For comparison, make sure you also choose the same type of loan program with the same loan amount. Suppose you want a $ 250,000 loan with VA or FHA or conventional.
But unfortunately, most people don’t do this. Because if the buyer doesn’t ask for interest rates today, some lenders who don’t care will give a quote from a 7-day lock.
However, lenders should quote a 30-day rate lock if the buyer doesn’t say anything. Because with 7-day rate lock, banks or other lenders have less liability. It’s the same thing, the longer you go with the loan the more liabilities. The interest rate will rise slightly. So, you must get a 30-days quote.
There will be a clear difference between the 60-days lock rate and the 7-days lock. So it’s very important. If you have a plan for closing within 40 days then you have to make sure that you want a 40-days lock.
After that, you have to look carefully. Who are you going with?. Usually, banks provide slightly higher interest rates with lower closing costs. On the other hand, there are brokers sometimes credit unions. They have lower interest rates with higher closing costs. Therefore you need to see everything. You will surely find people you can work with and go with.
Note, do they give the lowest rate? If not, you can give them a chance to compete with each other. Take two of them or add another one. Then give them a lender estimate. Take it easy. You will not lose in this situation. Send them the estimate. Tell them whether they can beat estimates from their competitors. In this way, you can get the best mortgage interest as the first home buyer. Even so, you can’t always be sure if you have found someone you can trust and know what he or she is doing. Hopefully what I write here can help you.