Comparing quotes for a mortgage should be easy, but there are some behind the scenes pricing information that borrowers should be aware of to get an accurate comparison.
Here are 4 tips to help you get to the bottom line:
1. Try to get all mortgage quotes on the same day, because interest rates can change on a daily basis, and sometimes even more than once per day depending on lender policies, various economic reports, and possible actions by the federal reserve.
2. Try to compare quotes for similar rate lock periods. Lender’s use rate sheets with mortgage pricing based on lock periods, such as, 15, 30, or 60 days. When a lender locks a rate, they guarantee the rate for that specific period of time. Longer lock periods usually have higher interest rates, which can make a difference in a quote.
3. Compare mortgage quotes with the same points, for instance, zero points, or one point. Lenders have tiered pricing which can be bought up or down. Increasing the mortgage rate will decrease the points, while reducing the rate will increases the points.
4. Have lenders quote any mortgage points separate from all other loan fees. Lenders usually have fees such as processing, underwriting, and documents, in addition to title insurance, escrow, or appraisal. Some lender fees may be negotiable. Items not considered as lender fees include: property taxes, insurance, and pre-paid interest.
Lenders are required to provide a good faith estimate of closing costs when an application is submitted, but actually one can be requested before starting the loan process.
To get an actual rate commitment, lenders will have to access a credit report. As a point of reference, a credit report contains credit scores from the three primary credit bureaus. For rate quotes, lenders typically use the middle of the three scores from the borrower who is the primary household wage earner.
By Rick Smith, visit www.crhome.com for more information on home equity loans, second mortgages, and home loans. |
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