5 tips

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5 TIPS TO FIND THE BEST MORTGAGE RATES

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Know What You Have, and What You Need to Borrow You can eliminate a lot of tedious back-and-forth with lenders by starting out organized on your end. Know how much cash you have on hand, and how much you’ll need to borrow to buy a home.

You’ll need at least enough savings to cover your down payment (typically 20% or more of the home’s value, but it can be less), closing costs, and your first year of property taxes and homeowners insurance. But lenders also like to see that you have some cash reserves to pay your mortgage in the event of an emergency, such as a job loss.

Next, figure out how much money you need to borrow — and do this before contacting a mortgage lender.

Going into a meeting with a lender confidently stating your requirements will steer the conversation directly toward your ultimate goal.

Ask Friends for Recommendations Did your friend or coworker recently buy a house? Were they pleased with their experience with a particular lender? If so, get the lender’s contact information. (By the same token, if someone you know had a hellish experience with a lender, get that information, too — so you can avoid the same fate.)

Your real estate agent or financial adviser may be able to recommend a few local mortgage brokers or lenders they trust, and while you shouldn’t blindly follow their advice, it’s certainly a good starting point.

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Research Mortgage Options Online If you don’t have any personal recommendations to go on, you can research local and national lenders online.

Here’s a tricky thing about online mortgage quote generators, though: They’re really convenient, but they can be a hassle, too. After entering some personal information to see how big a mortgage you can take out and what kind of rate you’d qualify for, you might think that’s that. But remember, lenders now have your personal information. That means within 24 hours of entering your name, phone number, household income, address, and other info, you can expect phone calls — lots of them — from a variety of lenders, good and bad.

Look for a Good Rate and Great Mortgage Terms Loan officers — the people you’ll work with at most lending institutions, whether it’s a bank or credit union — aren’t exactly used car salesmen, but they do have an interest in getting you to apply for a loan with their institution. Their goal is getting you to apply for a mortgage with them regardless of whether they can offer the best rates possible.

That means lenders are looking for your business — so make them earn it. Ask for a breakdown of all costs and fees — including origination or application fees, appraisal fees, commissions, and more — because comparing mortgages goes beyond just the interest rate.

Narrow it Down Don’t feel like you have to go with the first lender or mortgage broker you contact, even if you had an awesome meeting. Real estate website Zillow recommends finding at least three lenders with whom you feel you could work. Then do more research. Look at reviews online, or ask your real estate agent for their input.