Well, you’re not that guy, and you think you’re qualified enough to start shopping around. After all, you hate throwing money to your renter knowing that they secure that equity, not you. You might be ready to take on a mortgage of your own. Congratulations!
When shopping around for a mortgage through with different mortgage brokers in Utah, it’s important to look for the best rate when securing your loan. The best rate, however, is not the only consideration you should keep in mind.
Can they work with your credit score, your schedule, your home? These are a few of the questions you should ask.
Is the lender going to give you the best mortgage product (30-year fixed, 7-year ARM, etc.)? Part of that mortgage product is the rate associated with it. You want a great rate and your broker understands that. That’s why it’s important to lock in a mortgage rate while they’re still low.
Once you’ve chosen a lender and your mortgage product is decided, you need to lock into an interest rate based on the market at that particular time. It’s important to lock in your rate because the market is always changing and rates can easily go up. It’s a guessing game that most people don’t want to play.
Your rate lock is a binding agreement. Sometimes, borrowers see a falling interest rate based on the updated market trend and walk away from their locked-in rate. This is a dangerous gamble because it is hard to predict the market. Just when you think rates are going down, they could shoot up overnight. That’s why it’s very important to lock in rates early in the loan process.
Here at Advanced Funding Home Mortgage Loans, we do everything we can to secure the low rate on your loan. We even offer extensions when paperwork takes longer than expected or other problems come up.
Often times mortgage advertisements are outdated even before being displayed, printed, or heard. Mortgage rates can change from minute to minute. Mortgage type, credit score, and other factors also are taken into account when quoting an interest rate. By having a quote tailored to you (which often means pulling your credit and looking over income information), you can be sure it more closely matches the rate you’ll receive.
Understand that a “rate quote” is just a quote—nothing is promised.
A rate lock is an agreement with your specific interest rate.
A rate cap means your rate lock could be anywhere up to that cap amount, but not above. Find a broker that will secure your rate lock and not delay the process. You should be in-the-know about every step of your loan.
When you secure a rate, know how long that lock on the rate lasts. Some are only good for 7 days, 14 days, or most commonly 30 days. The rate lock should reflect how long it will take to close the loan, so 7 days will probably not be enough time. Sometimes you have to pay for a longer rate lock. Advanced Funding offers 60-day rate locks with the possibility of a free extension.
Rate locks can expire depending on your agreement, so when a broker asks for documents, be ready to deliver them right away. This will expedite the entire process and ensure you keep your rate to closing.
Your locked in interest rate isn’t the only variable to worry about. There are also mortgage points. Mortgage points are essentially pre-paid interest. Sure, paying 3% interest is awesome, but you might have to pay six points to get that quote, costing quite a bit more than what it looks like. One point is equal to one percent of the loan value. One point on a $100,000 loan equals $1,000. On a $150,000 loan, a point equals $1,500.
Let’s rewind a minute. What are points, anyway?
There are two kinds of points associated with loans: origination points and discount points.
These are ultimately paid by you to the lender for closing your loan and getting your money. One origination point is normal in the mortgage industry.
Discount points are pretty cool and let you “negotiate” the interest on your loan before it closes. You might be able to pay a half point now in order to save on a lot of interest down the road, which lowers your mortgage payment and the entire amount you pay altogether.
For discount points, lenders can show the breakdown of payments depending on the points paid for the cost of future savings. You’ll pay more now to save big later.
Now that you know about rates and points, you know how it can affect your money at the end of the day and will be more prepared for the loan process.