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FYI
How
To Shop Interest Rates
Everyone wants to get the lowest possible interest rate on their mortgage loan. On the surface, it looks pretty simply - who has the lowest rate? However, to be an educated consumer, there are a few things you need to keep in mind when shopping lenders for the best rate.
Don't Compare Apples With Oranges
Make sure you are getting information that takes into account all the variables associated with getting a rate quote. The variables to consider include:
- Loan Amount
- Loan Term (15-year, 20-year, 30-year)
- Loan Type (Conventional, FHA, VA, Jumbo)
- Loan Program (Fixed Rate, ARM, )
- Loan Purpose (Purchase, rate & term refinance, cash-out refinance, primary residence or investment property, etc.)
- Lock Period (15-day, 30-day, 45-day, etc.)
- Credit Score Requirement (what is minimum credit score requirement?)
For example, you shouldn't compare the rate for a 30-year, fixed rate FHA loan for $125,000 with a conventional loan even with the same terms.
And, if you get a good quote from someone, you will want to know what the credit score requirement is in order to get that rate. For the same program, lenders will charge a different rate to someone who has an excellent score as compared to someone else who has a lower credit score.
At Corridor Mortgage Group, we have access to a wide variety of lenders with literally hundreds of loan products. We will compare apples with apples to help you obtain a good program at a good rate.
Get Current Information
The lender with a good rate today, may not have the best rate tomorrow. Here's why: when business is slow, lenders will offer a competitive rate in order to attract business. When they offer fantastic rates, they will generate lots of business. When their pipeline gets too full, and they reach their limit in ability to process their business, they will then raise their rates in order to put a brake on their business.
So, if you get a great rate from lender A a week ago, you can't automatically assume that they have the best rate today.
At Corridor Mortgage Group, our loan officers monitor the daily interest rates of many lenders. They stay on top of the lenders who have the best rates at any given time. They will do the research to make sure you get the best loan at the best price.
Be Aware Of Other Costs Associated With Your Loan.
In addition to knowing what rate a lender will charge for a particular loan product, you will also want to consider the other costs associated with obtaining and processing your loan. Other items to consider:
- Application Fee (if any)
- Processing Fee
- Underwriting Fee
- Commitment Fee
At Corridor Mortgage Group, we will fully disclose to you all of the other costs associated with the origination, processing, and closing of your mortgage loan. Our loan officers will go over with you in detail all the expenses as they are listed in the "Good Faith Estimate" as well as the "Truth-In-Lending" statement which allows you to compare loans based upon the Annual Percentage Rate or "APR."
Don't Let The Rate Be Your Only Consideration
There are other factors that you should consider in addition to the interest rate. You will also want to know:
- How knowledgeable is the loan officer - how many years of experience?
- Can the loan officer handle the "tough" deals such as bad credit and borderline qualifying guidlines?
- Are the lender's underwriters preparing loan packages in a timely fashion?
- Does the lender have the ability to switch programs in the event of problems with the loan package?
- Granted, some of this may be a little more subjective. But that points out the need for someone with experience in the field to offer an honest evaluation.
At Corridor Mortgage Group, our loan officers have years of experience in the mortgage industry and pay close attention to the inner workings of the investors we deal with. They are able to "think outside the box" and come up with creative ways of closing your transaction.
Understand How Credit Scores Affect Loan Programs And Interest Rates
With the practically universal adoption of credit scores for evaluating borrowers, you should understand how a person's credit score affects interest rates. Many programs set a lower limit for acceptance into the program.
So if you get a great quote on a loan product, you should also ask what minimum score is required to get that rate. If your score is below that lower limit, the quote is no good to you for that particular loan program.
For more information check out the FYI article on Credit Scores.
At Corridor Mortgage Group we will disclose to you in writing the information about your credit score when your credit report has been ordered. Our loan officers will then research the wide variety of loan products from a variety of lenders to find the right rate for your situation.
In Conclusion
At Corridor Mortgage Group, we will be open and honest in saying that you may find a better rate with someone else. While we offer good and even great interest rates in many cases, we do not always offer the absolute lowest. However, our team of loan officers and processors have the knowledge base and experience to get you from loan application to settlement in the face of complicated and potentially devastating circumstances that would otherwise cancel your transaction.
What Next?
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