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When looking at a mortgage, understandably, it can be very intimidating and overwhelming. Not only are there many types to choose from, but there are all sorts of different fees, terms, and processes that are foreign to many of us. While trying to deal with these unsureties, it can be difficult to get the best bang for your buck, because there are so many moving parts. Let me show you what might help you sort navigate this time and help you get the best rate possible.

The first thing that you need to understand about mortgages is that there are many different options and solutions. The options that will be available to you will be based on your credit history, your debt to income ratio, and the equity that you have in your home. If you get denied by one mortgage company because of any of these things, there are hundreds others to choose from, and they are not all created equal. So, if you get turned down by one, or if a company’s policies or processes seem to not suit you well, try the next company; they will be glad to have you.

With that being said, you will typically get better options if you have a low debt to income ratio, a good credit score, and a good amount of equity. You can keep your credit score high by keeping your debt balances and accounts low, and by not being late on any payments you may have. Debt to income is based simpy off of how much your debt payments will be vs. how much the proposed monthly mortgage payment will be. The amount of equity you have will not always be a determining factor in some refinances, but will play an impact if you are pulling money out of your mortgage or if you are purchasing a home and how much you plan to pay as a down payment.

Second thing you need to understand is that your loan officer is there to help you. They want what is best for you and they want to get you the lowest rate possible as well. Loan officer’s don’t get incentives to sell you a certain interest rate or loan term, so be open with them and tell them where you are at and what you are thinking.

When working with your loan officer, it is important to understand a few things to make sure you can secure the best deal with them. One of the biggest misconceptions about mortgages is that there is a set “rate” for everyone on the market. As a mortgage loan officer, many people asked what the rates were on any given day. The answer I would always give them is, “Well, it depends…” There is no one set “cookie cutter” interest rate. Interest rates are actually on a sliding scale. Interest rates on this scale are in a wide range, ie: 4.25%-8.25%. Each interest rate in that range will have a different cost associated with the rate.

For instance, let’s say you wanted a 4.25% interest rate, it could cost 5% of what is called a buy down rate, or the cost of purchasing that interest rate. The percentage is taken from your final loan amount and can either be paid cash to close, or sometimes can be added to the end loan amount. Whereas, if you went to a higher interest rate, it would typically cost less of a

percentage, but your payment would also be higher.

When dealing with a sliding scale like this, it is important to get a quote on multiple rates to see what they would look like on your specific loan. Typically, it is best to find a rate in the “sweet spot”, that doesn’t cost you too much up front, but also gets you a low enough interest rate where you have a comfortable monthly payment.

Third thing you will want to consider is that not every lender will have the same interest rates. I

often tell people looking to refinance to “shop” the interest rate. Talk to multiple different lenders. Find one that has a good “sweet spot” that gets you a low rate for a good price. Many lenders have different incentives that can come with a refinance like lender credits, deferred monthly payments, quick process to close, etc.

Lastly, it is important to know what “locking” your interest rate is. When you get a quote from a loan officer, the quote is based on that day’s interest rate and pricing. Every day, the pricing of those rates can change for the better or for the worse. When you get ready to get the process started, and have agreed on a certain rate/pricing, you can actually lock in that pricing so that it is not subject to changing, regardless with what happens on the market. This will guarantee you get that rate and pricing if the loan closes in the allotted number of days specified on the lock. Talk with your loan officer on when the best time will be to lock in your interest rate and get your loan closed.

The more knowledge you have going into the refinance/purchase process, the better deal you will get. It never hurts to get multiple quotes to get you into the best loan possible. That “sweet spot” that was mentioned earlier might look different for everyone as well, so keep looking, keep searching, and you will not regret it.