In Part I of my two-part series on getting the best mortgage rate, I talked about the importance of good table-setting, like getting your credit score in check, and I discussed how shopping around and clamping down on a favorable rate were some of the most important things you can do to get the best mortgage rate.
But they’re not the only things you can do. Far from it.
Below, I’ve listed some other key steps that I would take (actually, I will take) when I’m trying to lock on a great rate for real estate deals that I’m cooking up.
Let’s have a look:
Greed isn’t good. There’s an old saying in Wall Street trading pits: “He who hesitates, waits.” In other words, if you pass up a good trade, another one may not come along for a while. Same with good mortgage rate deals. Once people get used to the idea of lower interest rates, they invariably expect those rates to go lower. But there’s no rule that says rates must go down just because you want them to. If an interest rate of 5.19% fits your financial needs, why wait for it to go to 5%, when the rate could just as easily go to 5.50%? Remember, a big reason why mortgage rates have headed south is because the Federal Reserve is out there buying up a lot of mortgages, thus sending rates lower. Who knows how long that will last? Moral of the story: keep greed out of the equation—if you find a rate that works for you, grab it. (For a good handle on how much mortgage you can afford, check out MainStreet's partner site, BankingMyWay.)
Use a mortgage broker. To get the best rate possible, it’s a good idea to have an expert in your corner. A good mortgage broker knows the intricacies of interest rate deals better than the average consumer. If you’re feeling overwhelmed, a mortgage broker can handle all the paperwork and significantly increase the chances of getting the absolutely best mortgage rate out on the market. They’re professionals and they have direct, knowledgeable access to the entire mortgage market. They’re also good negotiators and can help you not only lower your interest rate, but also your mortgage fees, as well.
Know your APR. Invariably, if you get a good APR, or annualized percentage rate, you’ll get a good mortgage deal. Your APR is more than just your interest rate; it also comprises a host of other loan factors, including points, broker fees, and ancillary mortgage fees. So if you can drive your APR down, you can drive your mortgage payments down. For help in determining your APR, try this BankingMyWay calculator.
Negotiate like a pro. If you bypass a mortgage broker or other mortgage professional, try to act the same as they would. In other words, negotiate everything, actually ask for the lenders’ lowest rate (you’d be surprised by how many people neglect this obvious point), and fight every cost and fee. Lenders will reduce rates and points, and drop fees, just to earn your business. The key is to ask for a better deal while you’re still negotiating—not after you sign on the dotted line. If you run into a brick wall, bring a copy of your unsigned mortgage agreement back to either a mortgager broker you trust or to a good real estate lawyer. Ask them what cost, fees, and deals they’d get aggressive about, and then act accordingly.
I like the real estate market right now, and will have lots to say about the best deals that I’m finding. But with interest rates being this low, I didn’t want to wait to get the good word out on finding the best deals. Use the above advice and see if you don’t get the best mortgage rate possible.
—Brian O’Connell contributed to this article.
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