Lender Rates-How do I Get the Best Rates?
There are several factors to take into consideration when shopping around for the best lender rates to make sure you get the best deal.
First, understand the importance of seeing the big picture and not just the interest rate that is quoted to you. Your actual annual percentage rate can be impacted by other factors such as:
- Discount points
- Credit charges
- Broker fees
Be sure to ask whether the rate that is quoted to you includes any of these possible charges.
Discount Points and How they Affect your Rates
Paying discount points to the lender can lower the interest rate you pay. Each point is equal to 1% of the value of your loan. So, if you are considering a $100,000 home purchase, one point would cost $1,000. That one point will usually lower your interest rate by about 0.125 percent.
Understanding Fees and your Lender Rates
While a low rate may sound attractive at first, always make sure you know what you will need to pay in fees. Just a few of the fees you could be charged for your loan include:
- Loan origination fee
- Underwriting fees
- Broker fee
- Attorney fees
- Settlement charges
- Appraisal fees
- Title insurance
- Recording fees
You may be able to discuss some of these fees with your lender and negotiate them. Always make sure you know what is included in each fee. If the lender says he or she is charging a fee that isn’t clear, such as a transaction fee or settlement fee, ask exactly what that fee covers. Don’t be afraid to ask the lender to negotiate on one or more fees, especially if you’ve done your homework and have information regarding lender rates offered by competitors.
Your Credit and your Lender Rates
Finally, understand that in many cases the lender rates offered to you are tied to the health of your credit score. Simply put, the better your credit score, the better rates you will be offered. Make sure you review your credit report carefully to ensure there are no inaccuracies present before you start shopping for lender rates. Also, if your credit score isn’t quite up to par, consider waiting a few months to get it into shape before making a loan application. Work on paying more than your minimum balance on credit cards to pay down the balance, don’t take on any additional debt and make your payments on time.
Shopping around for more than one lender can help you to find the best deal and lender rates possible. MortgageLenders.org can help you get started in finding a selection of lenders to locate the best deal.