Before you begin searching for the best mortgage rates, you'll need to decide what type of loan meshes best with your financial goals.
While the most popular loans are 30-year fixed-rate loans, you may also want to consider the benefit of a shorter term mortgage loan, such as a 15-year or 20-year loan. And if you intend to sell your property within a few years, you might also consider a hybrid adjustable rate mortgage with a fixed initial period of five, seven or 10 years.
In order to make a valid comparison of loan costs, you'll need to know more than just the interest rate. You'll need to know:
Remember, the best mortgage rates are only available to highly qualified borrowers, so if you have less-than-perfect credit, you may not be approved for the lowest mortgage rates.
If you are refinancing, you'll need to have an idea of how much equity you have in your home. If you have less than 20 percent equity, you may need to pay private mortgage insurance (PMI), which adds to your monthly payments. You'll also need to pay PMI if you are buying and making a down payment of less than 20 percent. If you opt for an FHA loan, you'll also have to pay mortgage insurance.
Once you know the type of loan you want, you can begin searching for the best mortgage rates in four places:
Once you have gathered mortgage quotes from a variety of sources, you can also go back to your bank, lender or broker and see if they can match or beat the best interest rate you've found. If you are a good candidate for a loan, lenders should be willing to compete to offer you their best mortgage rates.