Finding Great Mortgage Rates

The interest rate you get on your mortgage determines how expensive your mortgage will be. Even a single point difference can increase the overall cost of your mortgage by tens of thousands of dollars. If you want to save as much money as possible on the cost of your mortgage, then you need to shop around for the best mortgage rates possible.

Step One – How to Find a Great Mortgage Rate

The first step for finding great mortgage rates is to shop around. Start with a little window shopping. Gather information from a variety of lenders and mortgage brokers. See what programs are available, and see what interest rates are charged by which lenders.

Step Two – Start a Bidding War

Knowledge really is your best ally in finding a great mortgage. Show lenders that you’ve done your home work. Let them know if you’ve found a lower interest rate with one of their competitors. This will usually entice them to lower their interest rates to either match or beat the interest rates quoted by their competitors. To make this strategy work, you will need to produce printed quotes from the competing lender to show the lender that you want to work with.

Step Three – Improve Your Credit Rating

Another great way to save money on your mortgage is to improve your credit score. There are several ways that you can do this. First you can make sure that all of your credit accounts are kept current and in good standing for the 18 to 24 months prior to applying for a mortgage. Next you can pay down your credit card balances. Finally, you can correct any mistakes in your credit reports. All of these strategies will help to improve your credit score. The higher your score, the lower the interest rate you will be charged.

Step Four – Pay for a Better Mortgage Rate

After you have found the best rates around you can lower these rates by paying points upfront. Each point that you pay at closing will lower the interest rate that you are charged by a certain amount, usually about a quarter point or a half point. The lender that you work with can tell you how much it will cost for you to lower your interest rates to the level that you want.

Step Five – Choose a Shorter Loan Term

You can also get a better deal on your mortgage by choosing a shorter mortgage term. Usually, lenders will charge a lower interest rate for 15 year mortgages than for their 30 year mortgages. By using this option you can save thousands of dollars in interest, and you can pay off your home in half the time.