How To Find The Cheapest Mortgage Rates

As mortgage rates hit historically low levels, loan applications are exploding because homeowners are looking to refinance to try and cut their monthly payments. Mortgage companies are offering interest rates below 5%. Some Banks are even advertising 'no closing costs'. So how does one find the best deal with so many choices?

Shopping for a mortgage on the internet can be very effective. However, if it is not done properly, it can be not only confusing, but lead to very poor results. Finding the lowest interest rate does not mean you have found the best deal. Knowing about APR, Points Charged and the Good Faith Estimate are just as important. If the above does not sound familiar, then you are not ready to make an informed decision about which lender you are going to use.

Let's look at each briefly. A point is 1% of your loan amount. As an example, 1 point on a $175,000 loan is $1,750. The money is paid to the lender in exchange for a lower interest rate. Buying points is usually optional. The more points you pay to the bank, the lower your interest rate will be. APR, which is expressed as a rate, is a way to compare offers by multiple lenders. Let's assume one bank is offering 4.75% with 1 point and another bank is offering 4.875% with 0 points. In this example, it's not very clear which lender really has the better deal. One bank has a lower rate while the other has lower fees. Asking for APR or Annual Percentage Rate will help make the comparison between these offers a little easier. Although not completely accurate, generally the lender with the lower APR is the one with the better deal

The GFE or Good Faith Estimate is probably the most important part of the mortgage application. It's similar to the sticker price on a car. The GFE is a list of all of the costs associated with your loan. It also includes information about your interest rate and monthly payment. If you truly are looking for the best fixed rate mortgage, don't overlook the GFE. Similar to the dealer sticker on a car, these costs are negotiable if you approach it the right way. If done properly, you can easily save another $1000 or more on your mortgage transaction.

Finding the cheapest mortgage rate involves looking beyond just the interest rate itself. These other variables will contribute to locating the best mortgage program. The internet does make shopping easier, however, if you don't understand what you are looking for and how to negotiate with your lender, you will never be able to get the best deal and the lowest payment.

Getting a mortgage is the biggest financial decision we make in a lifetime. Having knowledge of the process will ensure you are shopping correctly and efficiently so you can end up with the lowest monthly payment possible.


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J. Pisicchio is a mortgage loan consultant with over 20 years industry experience. Formally trained as a credit analyst, he has helped many borrowers make the best possible financial decisions regarding home financing. For information on how to find the best fixed rate mortgage visit http://www.homeloanfinancingsecrets.com