We have been to many shops and we have availed many economical deals. If they have taught us anything, it is the importance of research before making a deal. If you are looking for a good deal, may that be on an electronic appliance or a good service, you have to research and look for it in different places. You also have to be vigilant enough to differentiate a good discount offer from a scam. Finding lowest interest rates on mortgage requires no different procedure.
One widely known fact out there is that the lower interest rates are availed on short term loans. If you can pay back in fewer installments, then you will have to pay lower interest but all the grass is not green, one drawback to this system is that fewer installments means larger sum of money squeezed into shorter duration of time, that means each installation will comprise of a large amount of money which is not a good option for people on low wages as they cannot arrange a larger sum of cash in small duration.
People seeking relaxation and a little molding in the system should look to avail Adjustable-rate Mortgage (ARMs) system. As good as this offer may sound; one main drawback again is that these offers come with a higher price tag since molding the system for personal use is never cheap. This is not good news for people on low wages or the ones with little financial savings. Plus ARMs do not have the same security of fixed-rate loans.
To pass through the system smoothly without any complication, one must follow the rules and steps laid out for them. Financial matters demand more vigilance since little mistakes can land you with deals which are not very convenient for you and you will have to make many unwanted compromises on daily necessities again. Returning to bad credit score and financial problems beat the purpose of taking a loan or a mortgage on first place.
To avail a mortgage with lowest interest rates possible, your first step should be to obtain a copy of your credit report. You should make sure that your credit report is accurate before providing it to lender. Federal law allows you to obtain a free copy of your report from each of the three major credit bureaus each year. Review your credit report for any error and if necessary, write to the credit bureau for a request to correct your report. Because if you present a better credit score, you can qualify for lower rates of interests; hence your impression on the lender matters, because if they see you as a responsible person, they will be assured that you can return the money with much hassle.
Since researching holds an important value and bargaining is possible in these procedures, you should contact several lenders in your area for the quotes. Talk with people you know for advises, better options and opinions as it can be very useful in collecting information for your research. Experts consider it to be favorable if you find at least five lenders for quotes, but if you can’t then you should have minimum three to be on the safe side. Each lender has a slightly different program and interest rates and one of them can turn out to be most favorable for you. It is wise to compare these programs and rates. Compare each quote using Page 3 of good faith estimates (GFE). The section titled ‘Using the shopping cart’ allows side-by-side comparison of mortgage programs. To obtain lower interest rates, you may have to pay additional fees called discount points. Discount points are prepaid interest equivalent to one percent of loan amount.
At the end you should negotiate the fees and interest rates. You should talk to the lender with higher fees or rates and ask him to lower the rates as the quotes you have from another lender are much lower. You should continue negotiating until you reach an optimum limit where you can afford it and the lender agrees with it. You should apply with the lender who gives you the lowest interest rates on reasonable fees. Ask the lender to lock the loan deal as soon as possible to ensure your decided rates do not increase due to any further external factor. Keep a close eye on the interest rates, if they drop significantly, you should renegotiate with the lender to further drop the interest rates as that can ease your tension of paying back larger amounts.