Best Mortgage Refinance

You want to get the best rate on mortgage loans or refinancing - of course you do. But do you know what is meant by “the best rate”, or how to find it?

The best rate on mortgage loans obviously includes the lowest interest rate. But there’s a lot more to it than that. If you are going to find the mortgage that is most advantageous for you, there are several things you need to look out for.

• Be careful of the rates you see advertised on the lender’s site as their “typical rate”. And don’t just call a lot of lenders and ask “What are your rates?” Most of them have “headline rates” they use to reel you in, but that doesn’t mean that this is the rate YOU will get. Many people find when it’s too late that the rate they are actually getting is a lot higher than they expect.
• Before you start investigating, work out what kind of loan program you need. You may be tempted by a 30-year fixed-rate mortgage because the interest rate looks low, but there is no sense in taking on one of these if you are only planning to be in the house for seven years.
• Save money by finding a mortgage rate that does not include a commission-based mark-up, otherwise known as Yield Spread Premium. This is the fee paid to the broker or retailer for closing a mortgage at higher than market interest rates. That means, for every 0.25 percent the broker “marks up” your rate, the lender might pay them a commission of 1 percent of the loan amount. So make absolutely certain that you are getting the actual rate you qualify for. For instance if you qualify for 6 percent and you have been marked up to 6.75 percent without realizing it, the broker or retailer will get an extra commission of 3 percent and you will end up paying out quite a lot more over the period of the loan.
• Make sure you get a guarantee that if the market rate improves while your loan is being processed, the lender will pass the full reduction on to you.
• When you are comparison shopping for a mortgage, you must compare all aspects of the loans on offer, not just the interest rates. Often lenders will draw you in with what looks like a favorable interest rate, only to recoup the money by over-charging you on lender fees and closing costs. The lender is legally obligated to send you the RESPA and Good Faith estimate of closing costs - insist on having this sent to you, and read it. Don’t commit yourself to any loan until you have seen this document for every program. That way you can work out what is the best program overall.

You really do owe it to yourself to find the best rate on mortgage or other loans. Borrowers often end up overpaying by thousands of dollars because they rush in without checking every aspect of a program. You know the saying “Fools rush in where angels fear to tread” - which will you be?

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