Tips for locking in the best home mortgage rate
- Always Shop for Home Mortgage Rates
You shouldn’t accept a builder or realtor’s referral without checking for home mortgage rates elsewhere. Remember you will pay your bills! Loan officers with referral network of builders and realtors may not have the best quote to offer since they have enough clients already. It is in your best interest to look around and shop for the best quote for your home mortgage. Once you have the quote, you can then go to the referred officer and see if they are willing to match the quote. In most instances, you end up with a even better deal.
- Call for Home Mortgage Quotes after 11:00 a.m. Eastern Time
With daily fluctuation, mortgage rates get carried over till 8:30 am the next day. With new home mortgage rates published at around 11:00 am Eastern Time, it makes it a convenient time to contact the lender. Sometimes, due to volatile bond market, Home Mortgage rates change midday. In such an instance, most lenders adjust the discount points for their rates for that day while other continue to use the morning rates!
- Always tell the Mortgage Loan officer you are prepared to apply for a loan immediately
Always tell the officer that you have a ratified contract in place to make the purchase and that you intend to lock-in on the rate that day once you have received quotes from all the lenders you contacted. This prevents them from providing fake Home Mortgage Rates to prevent you from contacting other lenders. If you want to save on time, effort and useless negotiation, this trick will work wonders for you.
- Ask for the total points and the total fees
You must enquire for total points (inclusive of discount points, loan origination fee, broker points) for each home mortgage rate. You do not want to know just the discount points with additional fee added only once the report is finalized. When you ask for total points and fees, chances are they’d let go of a major portion to have you stay on the deal and you’d score an all inclusive deal is almost the same amount.
- Always confirm the rate lock period when asking for a rate quote
You must specify the loan rate lock period. In case you need 45 days to close the loan, you must specify it or you’d be offered rates for 15 or 30 day lock periods where discount points will be less. It will give your lender an unfair edge. Once your rate lock expires, the lender can re-lock you at the original rate or the current rate, whichever is higher. To avoid this situation, it is best to not let your rate lock expire.
- Compute the dollar cost of the points and add all fees
Do not depend on the point system. You must compute individually of the cost in dollars by converting points to how much would they cost you in reality. Each company has a different system of points so it is best you compute the final figure that the loan will cost you than the points. You may also ask for it from the lender and then compare between quotes to see which costs the least. Also enquire for Insurance coverage requirements and rates.
- When you’ve found the Lowest cost rate, apply and lock there
You may have zeroed in on the quote that was cheapest when you enquired last with the lenders while still finding the house. However, now that the house in finalized, you must again update your quotes from the 5 lowest priced home mortgage lenders and then lock-in your home mortgage rate to apply now. You can request to lender to honor previous quotes if they work in your favour. You must also ensure that you are sent an actual rate lock confirmation through fax or mail and then check if your loan type and locked-in period is stated correctly along with the points you finalized on.
- Never Float the Rate
To FLOAT your rates is never a good option. While the FLOAT may give a very small part of that drop in actual discount points (If any at all), you will lose most of it in Loan officer commission. Also, you may never know the actual fall in discount points making it a win win situation for the loan officer. They may quote an unbelievable rate but won’t let you lock-in asking you to float and then later quote an unrealistic rise!
- Get a final good faith estimate several days before loan closing
You must ask for a copy of the final Good Faith Estimate well in advance before your scheduled closing day. You must check the points, fees, mortgage rates, Monthly insurance premium and anything else you bargained for. If any undisclosed fee is charged, you must ask for its removal and get a revised estimate immediately.
To wait till the day of loan closing to haggle over any discrepancy remains best avoided.