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3 Easy Tips For Finding the Lowest Mortgage Rate

05/24/2010

It's not hard to secure the lowest mortgage rates available if you're willing to take the process seriously and do some work up front. Take your time and do it right. The extra effort will pay dividends in the long run.

3. Do the math.

It may at first seem attractive to pay as little as possible in points at the outset of a mortgage transaction, but do the math before you decide. Your mortgage provider may allow you to pay more points up front in exchange for a lower interest rate over the course of the loan, and if your mortgage is a long-term arrangement, as most are, this lower rate could save you a significant amount in interest expenses over the years. The higher cost in points today may be worth it down the road.

Again, though, do the math. Divide the cost of the points by the resultant monthly savings to get a break even timeframe. If you pay $2000 in points up front in exchange for a savings of $80 dollars each month in reduced interest, it will take 25 months for you to break even. After those first 25 months, you'll have made up for that initial $2000 payment, and from there, the $80 a month that you save is pure money in your pocket.

2. Do the paperwork.

Read all loan documents thoroughly. Make sure there are no costs or expenses missing. Explore all avenues for your loan, you may qualify for an FHA home loan or VA home loan. Loan providers may tack on additional fees in the fine print in order to display a cheaper, more attractive interest rate at the start. Don't enter an agreement that you aren't sure about.

Your mortgage provider is legally required to offer you a good faith estimate or GFE. A GFE is a standardized list of expenses you will have to pay, including loan fees, inspector fees, appraisal fees, tax fees, processing fees, and others. Each of these costs is itemized on the list. Read this. Know it. Deal with the paperwork up front rather than the consequences after the fact.

1. Do it right.

Find a lender or mortgage institution you can trust. The Better Business Bureau and The Department of Real Estate both maintain active records of all licensed loan providers and include information about past deals these companies have made. You can also search for lenders through local industry connections and via resources such as Lender411.com. However you do it, get to know the company or lender you'll be working with and make sure you can trust them to treat you with respect and good character.

If you're willing follow these 3 easy tips to finding the lowest mortgage rate ,you'll have no trouble selecting a solid mortgage plan. Start searching!

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