Mortgage Refinance Rates on Lender411.com
By Rocky Foroutan
Lender411 provides the easiest way to compare mortgage rates today by providing you access to mortgage and refinance rates from top national and local lenders. Find the lowest mortgage interest rates whether you are buying a home or refinancing your existing mortgage. Sift through the rates from lenders and brokers nationwide. Fortunately the rate environment today is at historic lows and it is a great time to look for best possible interest rate.
How to Compare Mortgage Rates
The hardest part of finding the best deal on a mortgage is comparing mortgage packages between different lenders. There are numerous costs involved and numerous variables to consider. Beyond the down payment and the principal of the loan itself, you'll need to analyze the interest rate, the up-front points required, and the fees or closing costs. Let's define these first.
- The interest rates is the part of the loan package that everyone is most familiar with. The lower the rate and the shorter the payback timeframe, the less you will have to pay over the length of the loan.
- A "point" is a sum of money equal to one percent of the total principal balance of the loan. If your loan amount is $250,000, a single point would equal $2,500. Lenders allow or sometimes require a certain number of points to be paid in exchange for certain interest rates discounts. A lender may offer a lower interest rate in exchange for one or more points paid up-front, and there are often numerous point-rate combinations available. Lenders will typically work with you on this.
- A closing cost is any additional fee required in order to close the deal between you and the lender, such as escrow charges and transfer charges. There are often other fees involved as well, including home inspections, mortgage insurance premiums, underwriting fees, and even an application fee. Many potential homebuyers overlook some of these costs, and as a result, many items in this category have been dubbed "hidden fees."
Compare all of these costs for each mortgage package you are considering with each lender you're working with. This may not seem too complicated at first, and in principle, it isn't—comparing prices is as simple as basic addition. But there are other non-price factors to consider as well.
Find out what the lock-in period is for each lender. The lock-in period is the timeframe during which the quoted prices will remain the same. Rates fluctuate rapidly, and other costs—such as point requirements and fees—fluctuate along with them. In other words, all the prices that your lenders just quoted you are subject to change. But lenders recognize that this is confusing. A lock-in period is a certain length of time—generally 30 to 60 days—during which the lender promises not to adjust his or her quoted prices. If you find a deal that seems too good to be true, check the lock-in timeframe. It may be that the lender doesn't guarantee the prices for more than 10 days. Don't make an offer on a home unless you have found the mortgage package that fits you and that mortgage package has been guaranteed to you by your lender for a sufficient length of time.
Analyze the features of all possible loan package arrangements. Are there cash reserve requirements? Maximum LTV requirements? Are there penalties in place for early repayment? Is the interest rate fixed or adjustable? These elements of the loan may not appear as up-front costs, but they could significantly affect the ultimate value of one loan package over another. As a side note, when comparing offers between lenders, compare identical loan types. Don't compare a fixed rate to an adjustable rate—they're very different.
Let's summarize this. Comparing two identical loan types between several lenders involves 3 steps.
- Select an interest rate and lock-in period. Analyze each lender's offer under these parameters. The point requirements and closing costs will vary, but every lender will, for the most part, be able to provide a standard interest rate and lock-in period.
- Compare the additional costs, such as points and closing fees. Some lenders may require costs that others don't. Be very cautious here. Make sure you're aware of every fee involved. This is where many home buyers get hit hard with unexpected costs.
- The lender with the lowest total cost at this point is the lender with the best offer.