How to Fnd the Cheapest Mortgage - News-Credit-Mortgage-Coin

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Friday, February 5, 2021

How to Fnd the Cheapest Mortgage

Mortgage rates are falling, but it's still worth looking for the best deal


After rising in 2018, mortgage rates have fallen since the beginning of the year. The average mortgage APR (annual percentage) was recently 4.28 percent, according to Freddie Mac, compared to a high of 5 percent in 2018.

But just because prices have come down doesn't mean you're getting good business.

"Many homebuyers are intimidated by the mortgage process and simply choose what is easiest - usually what their local bank offers," said Greg McBride, financial analyst at Bankrate.com.

When we were shopping, we found lower interest rates at various banks. HSBC Bank offers a 30-year fixed-rate mortgage with an annual interest rate of 4.03 percent. Wells Fargo offers an annual interest rate of 3.98 percent.

Here are the steps you should take to find the cheapest loan available.

Mortgage rates are falling,


Choose a fixed or adjustable rate loan

If you plan to stay in your home for at least a decade, a 30 year fixed rate loan with relatively low monthly payments is your best bet.


If you can afford higher payments and want to forego debt sooner, consider a fixed term of 15 years. It has a lower interest rate and could save you thousands over the life of the loan.

Another option is to choose a short-term adjustable rate mortgage (ARM). These mortgages have lower interest rates than higher interest rates for an introductory phase. For example, with a 7/1 ARM, the rate is fixed for seven years. After this period, it can be adjusted annually on the basis of market interest rates, but only a maximum of 5 percentage points above the original interest rate.


If you plan to have your home in your home for the years to come, this may not be your best option, especially since fixed prices are now attractive. "You don't want to be able to adjust your adjustable rate mortgage and you are prone to large increases in payments," says McBride.


Buy a loan

Buy a mortgage from a variety of lenders including banks, mortgage brokers, online originators like Quicken Loans, and aggregators like Lending Tree. Go to their websites and fill out preliminary forms to get instant interest rate estimates or calls from company representatives who can get quotes for you quickly. You can also go to Bankrate.com to compare mortgage rates and find the best deals.

Another option is to find a phone number on the lender's website and call it directly. We found that you can get fairly accurate estimates over the phone. If you want an offer that could lead to a firm offer, you will need to give your social security number to the lender.

Before you deal with lenders, decide what type of home you are interested in and what type of mortgage you want. You also need to tell the lender where you are now. Are you just starting to buy a home or do you have an accepted offer or a signed contract?

Once you start completing loan applications, there are many aspects of your financial and personal life that you need to review. Make sure this part of the process goes seamlessly by having all the important documents on hand. Refer to Zillow's checklist for information on the requirements that are typically required.



Look at smaller players

In addition to examining a mortgage from major banks and online lenders, smaller, lesser-known players like credit unions and community banks should also be looked into.


Search online by your home state name and terms such as "Community Bank Mortgage", "S&L Mortgage", and "Credit Union Mortgage". In this way we found many options.


Keith Gumbinger, vice president of HSH.com, a mortgage information website based in Riverdale, NJ, says these smaller lenders tend to have better rates on ARMs and offer better terms and rates to people with variable income streams like the self-employed.


Consider a mortgage broker

A mortgage broker can shop at many lenders and get better prices than you can. Be aware, however, that brokers are paid by the banks, not you. So check them carefully.


"When you choose mortgage brokers, you will receive referrals from friends or colleagues who have had good past experiences with a particular mortgage broker," says McBride.


Mortgage brokers can save you money. For example, when we compared the best interest rate we could find on the Quicken Loans website to the best interest rate from a broker who worked with United Wholesale Mortgage, the broker received an interest rate that was half a percent lower. And while the rate we found came in points, the deal the broker offered us required zero points.

You can use the findamortgagebroker.com website to find a broker.


Understand the CFPB credit rating

When you've seen some attractive interest rates from some lenders, ask each one for a credit estimate. This is a standard document developed by the CFPB to help you compare mortgages. You can even use it to compare different types of loans, such as: B. a 30 year fixed loan and a 10 year ARM.


To get a credit estimate, you will need to provide records of your income and assets, among other things. And you'll need to provide your social security number so the lender can research your credit history.


Get credit estimates from as many lenders as possible. Multiple inquiries on your credit file will not degrade your credit score as long as they are all received within 45 days and refer to the same product - for example a mortgage. In the circumstances, they are all considered one request, according to the CFPB, so you can have a look around without damaging your balance.


Steve Baughman, a housing specialist at Fair Housing Contact Service, a nonprofit that provides HUD housing advice in Akron, Ohio, suggests that you get all loan estimates on the same day so you can make accurate comparisons. The credit estimate provides three metrics that you can compare between lenders: the annual percentage, the interest rate and principal accrued after the first five years of the loan, and the "total interest percentage," which is the total amount of interest you receive overpaying the term of the loan as a percentage of your loan amount.


Ron Haynie, Senior Vice President, Mortgage Financing Policy at Independent Community Bankers of America in Washington, DC, recommends focusing on the first page of the report, which shows the amount of cash required at closing. "That's what you need to get to the settlement," he notes.

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