Who wouldn’t want to find the best home loan rates? Finding the best rates means potential savings of tens of thousands of dollars over the life of your home loan. So how do you go about finding and locking in low home loan rates?
Start with some home loan homework
A good place to start your search for the best home loan rates is the Freddie Mac home page, www.freddiemac.com. There you will find a link to the government-sponsored entity’s weekly home loan rates survey and the average loan rate nationwide for 30-year and 15-year mortgages. Since those are average rates, the best home loan rates will be slightly lower. The Freddie Mac page also tells you the average fee lenders are charging for the loan.
LendingTree.com’s home page displays an up-to-date list of average home loan rates for 30-year fixed, 15-year fixed and 5/1 adjustable-rate loans. And a general Internet search will bring up lots of sites with home loan rates for comparison.
Keep in mind that the these home loan rates are generally reserved for prime borrowers – those with excellent credit and dependable cash flow. If that’s not you, don’t despair. The question isn’t so much the best-available home loan rate. Rather, it’s what is the best home loan rates you can qualify for?
Shop around to find the best home loan rates
It’s a good idea to compare the Annual Percentage Rate, or APR, for different loans. The APR includes the cost of lender fees and is more accurate depiction of your home loan rates. Many lenders post the APR of different kinds of home loans on their Web pages.
If you go through LendingTree, up to four lenders will present loan offers customized to your financial situation. Compare the rates and fees on these offers to find the best home loan rate that you qualify for. Your lender should prepare a good-faith estimate.
Negotiate a good rate
One way to get the best home loan rates is to negotiate with the lender to eliminate or reduce certain fees, including application, processing and underwriting fees. Or, you might be able to get a better rate on your loan by paying a little more up-front.
Read the fine print
A low rate won’t help you much if you will pay a substantial penalty for paying off your loan early through a sale or refinance or if your interest rate will reset later on in the loan. Make sure you read the fine print of your loan documents and ask questions about anything you don’t understand
Lock in when you get the best rate
A rate lock means the lender agrees to give you the home loan rate available that day even if your home loan closes a few days or weeks later. You might be charged a fee to lock in your home loan rate for more 30 days, so negotiate the lock period that helps you get the best rates.