Why It’s Important to Compare Mortgage Rates
- Actual studies have proven
- That those who obtain more than one mortgage quote
- Save money compared to those who don’t bother shopping around
- Aside from saving money, it’s important to use a mortgage lender that can successfully close your loan with few hiccups
As I often say around here, it’s important to compare mortgage lender rates to ensure you receive favorable pricing on your mortgage.
Your rate and payment can greatly affect your home buying decision, so it’s something that should be taken very seriously.
If you only gather a single mortgage rate quote, which many individuals seem to do, especially first-time home buyers, you won’t know if it’s good or bad relative to what else is out there.
This isn’t just casual advice – there are studies that prove those who gather more than one mortgage quote actually save money on their home loan. And not just a little, potentially thousands via years of lower monthly payments!
While mortgages are mostly a commodity (similar if not the same product from lender to lender), the mortgage rates they offer can vary for one reason or another, just like how milk and eggs may cost more or less depending on the store you buy them from.
And mortgage rates today could be entirely different tomorrow, so it’s also important to monitor them over time until you lock in your rate.
Sometimes the key to a lower interest rate is simply shopping around so you can pit mortgage lenders against one another. With multiple quotes in hand, you might be able to negotiate more effectively.
Aside from the interest rate, it’s also important to consider the fees being charged, including any mortgage discount points that must be paid to obtain the rate in question. Together, this makes up the APR, which is a more accurate representation of the loan.
Below are today’s mortgage rates from a variety of local and national home loan lenders.
How to Effectively Compare Rates
- Answer all questions accurately and use the available filters
- Pay attention to both the interest rate and annual percentage rate (APR)
- You can choose to compare either home purchase or refinance rates
- The estimated monthly payment doesn’t include taxes and insurance
First off, be sure to answer all questions as accurately as possible to ensure you receive the most precise loan rates. The comparison tool has a filter in which you can adjust the purchase price (or amount of home equity in the case a mortgage refinance), loan amount, down payment, credit score, and so on.
The more thoughtfully you answer all those questions, the more accurate todays rates will be.
Also consider a variety of loan options aside from the 30-year fixed. You can choose from several adjustable rate mortgages and fixed-rate mortgages, all of which might be suitable based on your financial goals.
You can also see FHA mortgage rates and VA mortgage rates, along with jumbo mortgages if home prices in your area exceed the conforming loan limits.
Once you compare lenders to see what’s out there, you can input their rates using a mortgage calculator to determine the potential savings, including total interest saved and monthly payments.
As noted, also be sure to factor in the closing costs (origination fees, third-party fees) along with how long you plan to stay in the property. Both are important considerations whether it’s a purchase or a refinance.
The estimated mortgage payments you see listed do not include real estate taxes, homeowners insurance, mortgage insurance, HOA dues, and so on. Be sure to factor those in as well to get a complete picture.
Some loan calculators will estimate these items on your behalf, but getting the exact figures from the source is best.
Lastly, note that current mortgage rates are subject to change at any time, as mortgage interest rates can change daily and even intraday if conditions permit.
You can compare purchase and refinance rates on a variety of home loan programs from the popular 30-year fixed to adjustable-rate mortgages like the 7/1 ARM, and everything in between.
As a rule of thumb, loan types with a shorter fixed period, such as the 5/1 ARM, will come with lower interest rates, all else being equal. And shorter-term mortgages, such as the 15-year fixed, will be cheaper than 30-year mortgages.
Read this: How are mortgage rates determined?