Comparing Mortgage Quotes
Once you have your mortgage quotes in hand, be sure you are comparing the right things. An 'introductory' rate on your mortgage is not the rate you will be paying for the life of the loan. If the mortgage rate is too high, after the low introductory rate, you may end up paying more.
Here are some tips to help you get and compare quotes more effectively:
- Mortgage interest rates can change on a daily basis. Therefore, try to get all your mortgage quotes on the same day, if possible. If not, be prepared to check with lenders if they can meet a rate.
- For certain types of mortgages, the lender's interest rates are based on a period of time that they agree to 'hold' this mortgage interest rate. This gives you time to shop for a house, while knowing what your interest rate will be. This holding period, or lock period, can be as short as 10-15 days or as long as 30-60 days. Longer lock periods may have higher rates than shorter lock periods, depending on whether rates are going up or down. To be accurate, compare mortgage quotes for similar rate lock periods.
- Compare the average percentage rate (APR) for any adjustable rate mortgage and have lenders quote the interest rate separate from other fees.
- You'll want to compare all fees separately. Be sure to ask what fees are for and for definitions of any terms you don't understand.
- Don't be fooled by other kinds of incentives, like cash back. Even if you are going to take that cash and put it directly against your mortgage, it's not necessarily a good deal unless you are getting the best mortgage interest rate possible at the same time. Often incentives are offered on longer-term mortgages, which are usually at higher interest rates than the shorter-term mortgages. Therefore, the lender expects to make more on you. That's how the lender can afford to give you the incentive.
- Guide to Lenders