mortgage shopping 101Although up slightly from previous weeks, according to Freddie Mac, 30-year mortgage rates averaged 3.82% in October. That means interest rates averaged below 4% for 12 consecutive weeks..

This is great news for home buyers, home sellers and homeowners looking to refinance.

Whether you’re buying a home or considering a refinance, your home is typically the single largest investment you’ll ever make. Unless you’re paying cash, you’ll likely need a mortgage. Some due diligence may ensure you’re getting the best deal for you and your family.


A knowledgeable mortgage professional will assist you by asking the right questions, then matching the best loan to your needs.

Mortgage loans are everywhere. You can obtain a home loan from a variety of institutions – credit unions, banks, mortgage brokers and mortgage bankers.

Choosing the right mortgage professional is important because the mortgage market is constantly changing. Loan programs, closing costs and interest rates can change from one day to the next. More often than not, the news you read today is based on yesterday’s information.

One of the best ways to find a great mortgage professional is from friends who’ve recently obtained a mortgage. Ask your friends how they were treated, about the rates and fees charged, and whether or not the loan closed in the time frame promised.

Another great way, especially when buying a home, is to ask a real estate agent for a recommendation. Most agents will have a couple of go-to lenders with whom they work on a daily basis.


Some of the most common questions asked when shopping for a mortgage are:

  • What are your closing costs?
  • Do you charge points?
  • What is your interest rate?

Closing Costs

The lowest rate may not always be the best deal. Different lenders will have different charges. Although you may get a low rate, you may be paying higher costs.

In general, higher fees will come with a lower rate and lower fees will often mean higher rates. Regardless, the fees are usually still there. It just depends on how the loan is structured. Ask for clarification.

Some common costs are origination fees, credit report fees, tax-related fees, appraisal fees, underwriting fees, etc.


Loan discount points are used to buy down the interest rate. One point equals one percent of the loan amount.

Some lenders will build points into their rate quotes. For example, a lender may quote a 30-year mortgage of $200,000 at 3.75% but that may come with a charge of one point, or $2000.

Other lenders will quote you the “par” rate (a rate without points). Be sure to ask whether or not points are being charged in your rate quote.

Paying points may still be the best option for you but you’ll want to know all of the details so that you can be sure you’re comparing apples-to-apples.

Interest Rate

It’s not necessarily wise to shop on interest rate alone. However, the rate on your loan will ultimately determine the cost of the mortgage and the amount of your monthly payment.

Even slight differences in the rate can amount to tens of thousands of dollars over the life of the loan.

Take for example a 30-year loan of $200,000 at 4%. Your monthly principle and interest payment would be $954.83. At 3.75%, your monthly payment would drop to $926.23, and you’d pay $10,295.79 less than the 4% loan.

It’s also a good idea to compare interest rate trends in your state.


With mortgage rates at historic lows, it’s a great time to buy or refinance a home. Experts recommend talking to several lenders so that you can get the best possible mortgage with the lowest rate and fees.

How do you know if you’re getting the best deal? It’s tough to know for certain. However, by speaking with friends, family members or real estate professionals, you can pointed in the right direction and feel better about your decision.


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