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Mortgage rate shopping

Why the Best Rate May Not Be the Best Value

April 24, 2015 - You can look and look at mortgage rates from multiple companies, in hopes of finding the lowest rate out there. But is the lowest rate equivalent to the best deal? Take it from your local mortgage professionals – the answer is oftentimes no. There are many factors beyond rate that go into a mortgage loan package. Be sure you know all the details so you can compare apples to apples.

Keep the following tips in mind when comparing mortgage rates:

  • What is the lower rate going to cost you in closing costs? Be sure to gather and compare all the details so you're doing an even comparison. For example, if you remain in the property for only a few years and paid expensive closing costs to get a lower rate, does that make good financial sense?
  • When you get a rate quote, inquire about the length of the lock. Did Bank A quote you a rate lock for 60 days, and then Bank B quoted you a lower rate but the lock is only good for 25 days? Shorter lock periods can mean expensive lock extension fees if the deal doesn't get done during the lock period.
  • Be wary of banks that offer you a lower quote only after you tell them about a lower rate from a competing bank. What is the other bank giving up to get your business? Will you get the level of service and expertise you require? A mortgage loan is a long-term commitment that requires long-term service.
  • Be leery of over-shopping. Although credit bureaus are aiming to hit your credit with just one inquiry within a 45-day period, if Bank A pulls credit as John A. Doe and Bank B pulls credit as Jonathan A. Doe, you credit has just been hit with another inquiry due to un-identical name input. This may affect your credit score.
  • Rates can change daily. A rate that looks the best one day may not be the best rate the very next day. If you find a rate that fits your needs, it's best to take the rate before it goes up.
  • Special, local financing programs offered by Bremer may make more financial sense than a mortgage loan with the lowest rate.
    • First-time Homebuyer Programs: Did you know a first-time homebuyer is identified as someone who has not owned a home in the last 3 years, regardless of prior home ownership?
    • State Programs: Minnesota, North Dakota and Wisconsin all have state-specific programs to help make home ownership more attainable. Communities, counties, nonprofit agencies and other groups also may offer additional home buying programs. Some of these options include rural development loans, programs with low down-payment options, closing cost assistance, and deferred loans.

Have a conversation with a Bremer mortgage loan officer to learn more about how to find the best mortgage program for you.

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