Shopping Interest Rates
Must have information when shopping for
interest rates?
First thing you should do is order a current copy of your credit
report, with scores, from the 3 credit reporting bureaus before you
start shopping mortgage rates. Almost every single, albeit well
meaning shopper, gives some incorrect information when they first start
shopping for mortgage rates.
| Equifax |
Experian |
TransUnion |
P.O. Box 740241
Atlanta, GA 30374
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P.O. Box 2002
Allen, TX 75013 |
P.O. Box 2000
Chester, PA 19022-2000
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| 1-800-685-1111 |
1-800-787-6864 |
1-877-322-8228 |
Each time your credit is checked the credit companies may reduce your
score a little. If all credit checks are done within 30-45 days
for the same reason, (home loan, car loan, etc..) you should avoid any
deductions. Once you've decided on the mortgage company and loan
officer, and only then, go ahead and let them run their own copy of your
credit report.
Most people call 3-5 mortgage brokers when shopping for rates and say
I have A+ credit, what's your interest rate for today. First off,
90% or more of borrowers are not going to hear an interest rate for
their particular situation. The interest rate they will quote you
is the lowest rate possible for a borrower with perfect credit, low debt
ratios, good job history and 20% or more down payment.
Of course you're also going to run into the loan officer whose rate
is far lower than everyone else's. Other loan officers are quoting
6.0% and one particular loan officer says he has the connections to get
you 5.25% (for the same fees/costs). What do you do? Take it,
right? Heck "NO", you run from this loan officer/mortgage company
as fast as you humanly can, we're not kidding around on this one "RUN".
There are many situations in life where the good old phrase "If it
sounds to good to be true, then it is" fits. This is definitely
one of those times. There is no secret lender this loan officer
has (that no one else seems to know about) with rates three quarters of
a percentage point below everyone else's.
It's a teaser rate to get you in the door, period! Once there,
they will undoubtedly inform you that "your situation" doesn't warrant
that rate, so of course your rate will have to be higher than originally
quoted. Most of the time you will end up paying much more then if
you had gone to one of the loan officers who gave you an honest upfront
quote.
Borrowers should shop a minimum of 5 brokers, disregarding the lowest
and the highest interest rates of the 5. Call back the 3 remaining loan
officers. Now you can give more in-depth information and try to
decide which one you believe will work the hardest to get the right loan
for you. Look it's a game. Plain and simple; you want to pay as
little as possible and they want to earn as much as possible! It's
all about finding the loan officers and lenders that play the game
honestly.
Additional questions to ask when shopping rates
- What type of mortgage is it - fixed rate,
adjustable rate, FHA, VA, other?
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- What is the loan term (length of loan)?
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- What is starting interest rate?
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- Can the balance of the loan rise?
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- Does the loan payment include an escrow?
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- What are the estimated total payments(principle,
interest, taxes, insurance, PMI)?
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- What are the estimated fees and other closing
cost?
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- Does this loan have a prepayment penalty?
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- Does this loan have a balloon payment?
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- Does the loan have an adjustable rate?
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- When is the first adjustment?
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- What is the most the rate can be at the first
adjustment?
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