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Shopping Around for the Best Mortgage Rate



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By : Miranda Marquit    99 or more times read
When you are making a large purchase, like a home, it's important that you get the best possible deal on your loan. When you buy a home with a mortgage, you are promising to pay your lender back with interest. If you aren't careful with what you choose to do, you could end up with a higher interest rate that costs you tens of thousands of dollars over the life of your loan.

If you want the best deal on your mortgage, you need to shop around. Here are some tips for getting the best deal on your home loan:


Share Information with the Lenders

Your first order of business is gather up basic information on your financial situation. Eventually you'll want a pre-approved mortgage, and your potential lenders will need the appropriate information.

Before you call around, or visit with mortgage lenders, make sure you have the following information to share with them:

  • Your credit score: Get a basic idea of your credit score. You can pay for this at myFICO.com, or get a ballpark idea from free sites like CreditKarma.com, CreditSesame.com and Quizzle.com. These free scores won't be what is actually used to figure your terms, but they can give you an idea of where you stand. The higher your credit score, the better your terms.


  • Your income: Let the mortgage lender know your current income. Don't fudge the numbers. The lender will find out later anyway. You want to give your lender an accurate idea of what you can afford.


  • Other debt obligations: Be up front with potential lenders about your other debt obligations. This will make a difference later. Let lenders know now, while you are shopping around, so you get the best possible comparisons.


Call three or four lenders, or set up meetings with them, to discuss your financial situation, and the possibilities for mortgage loan terms.


Compare Apples to Apples

Make sure, as you compare mortgage options, that you are looking at the information for the same mortgage specifications. Decide, ahead of time, what you are looking for. Figure out an approximate mortgage amount, as well as a term length. You can't adequately compare a the terms on a 15-year mortgage to those on a 30-year mortgage. The terms for a variable rate mortgage will differ from those related to a fixed rate mortgage.

Make sure you are getting a straight across comparison. You want to choose the best option from amongst similar mortgages.


Let Lenders Know You are Shopping Around

As you talk to potential lenders, let them know you are in the shopping around phase. This indicates that you will be talking to their competitors. If you are a desirable customer, you might be able to get another quarter point knocked off the interest rate, or convince one of the lenders to waive the fees on your mortgage origination. Be up front, and even share the best deal you've received so far if you are asked.

It's possible to get a better mortgage if you shop around. Don't be afraid to find the best deal for you.
Miranda is a freelance writer and professional blogger. This post was written on behalf of Know Your Bank, a web site that helps consumers compare banks.

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