If you are in the market for a home, getting a mortgage, you probably feel, is the best way to go about it. What makes this a good idea is that right now, we happen to be enjoying some of the best mortgage rates we’ve seen in decades. But have you ever considered the difference it can make to the mortgage you end up with, to go through a mortgage broker or to go through a bank loan officer?
Walking up to a specific bank and dealing with its loan officer can be a good idea as long as you know a lot about the products on offer with different banks and lenders. You’ll know enough about which bank you want to walk up to. If not, dealing with a mortgage broker who is a freelance agent with links to hundreds of banks and lending institutions, can be your best bet in finding the best mortgage rates the market has to offer. It’s quite the way it can be going to a website like Travelocity for the cheapest airline tickets versus directly going to the American Airlines website.
To find the lowest rates, your search needs to be relentless and it needs to deal with the way the system works. You need to hunt for the lowest interest rates and processing costs, the best points and the most favorable adjustment features. No attention needs to be paid to where the mortgage comes from or what kind of relationship you have with your current bank. It’s pretty certain that before your mortgage term is up, that the owner will have sold your mortgage to someone else – and you’ll find yourself dealing with a new party anyway.
When you finally decide on the kind of mortgage you want and the lenders you’ll be working with, take a look at the good faith estimate, the GFE, that they give you (you did get one as you have a right to under the law, didn’t you?). Make sure that the interest rate they quote you is guaranteed for certain. Ask for what your window of opportunity with rates is. If it appears that the best mortgage rates you worked so hard for are at risk of rising, ask for a lock-in and get it in writing. Sometimes, they’ll give you a lock-in with a floating option. What that means is, that you don’t have an absolute lock. If rates rise of more than a certain amount though, you have protection against that.
The closing costs on a mortgage may be 2 to 3% of the price of the home you are going for. And it’ll include all kinds of costs – an origination fee, appraisal and survey costs, transfer tax in attorney’s fees and so on. Make sure that you know what your closing costs are. And of course, on top of all this, your lending institution will want a separate credit report fee for pulling your report. And this isn’t included in those closing costs. Make sure that you are prepared with name of the employee in the lending institution are dealing with in case you are not clear about something down the line.