How to Tell if You're Getting the Best Mortgage Rate | RealtyPin.com
LOS ANGELES, Feb. 28, 2013 /PRNewswire-iReach/ -- With all the talk of percentages, averages, and trends, how do you really know if you're getting a good mortgage rate? The real estate and mortgage experts at RealtyPin.com are here to help you.
You've got to answer these 5 questions before you sign on the dotted line:
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Did you do your homework, or did you blindly follow your realtor's advice on which lender to work with?
Most people think that because it's illegal for a realtor to take any money in exchange for steering you towards a certain lender, that they've found you the best deal possible. However, that's not always the case. Your realtor may simply be in the habit of working with certain lenders, because they've got a good professional relationship -- but that doesn't mean you can't get a better deal elsewhere. Or, your realtor may have simply overlooked a lender that could have given you a better deal. Bottom line -- you owe it to yourself (and to your budget) to do some comparison shopping. If your realtor is a good one, she won't be offended that you've found a lender on your own.
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Are you basing your opinions on old information?
Studying mortgage rates can get tricky, simply because they change by the day! Just because you saw an ad for a certain rate two weeks ago doesn't mean that you can still take advantage of it. If you want to see if you're really getting the best deal, you're going to have to look at current rates and offers.
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Did you lock in your rate with your application?
This is the biggest gamble in finding the best mortgage because there's no "right" answer. Here's what you need to know to make this option work for you:
Lenders will let you lock in the mortgage rate when you turn in your application -- meaning that whatever the rate is today will apply when you get approved, even if that's a month from now and the rate is totally different by then.
If you don't lock in your rate, it will "float" -- meaning that your mortgage rate will be whatever the rate is on the day you get approved. You probably won't see a huge difference, but even a fraction of a percent can translate into thousands of dollars either way every year!
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So, how do you make the right decision?
You need to look at the current trends when you apply. If rates seem to be trending up, you probably want to lock in your rate. If rates are on a downward trend, you probably want to float.
For example, the average 30-year mortgage rates have been on the rise ever since the end of July. If you applied for a mortgage back on July 30th, floated your rate, and got approved today, you'd be paying about 0.20% more. That's money you didn't need to spend!
How long are you planning on owning the home?
On average, first-time homebuyers keep their homes for three years. Second-time homebuyers tend to keep their houses a little longer, but not by much.
It's a waste to get a 30-year mortgage -- and pay higher rates every month -- if you're only going to keep the house for a few years. If you opted for a 15-year mortgage today, you would save a full percentage point on your rate!
Or, you can opt for a hybrid mortgage -- which offers lower rates in the beginning, then goes up in a few years. By the time the rate increases, you won't own the home anymore!
James Paffrath, RealtyPin.com, 1-(866) 960-8649, firstname.lastname@example.org
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