Should I shop around for the best rate? Q&A with Dave Kochenberger

Should I shop around for the best rate? Q&A with Dave Kochenberger

Published May 14, 2024

As a first-time homebuyer in the current housing market, we understand how difficult it is to find “the best rate”.

In this Q&A, Dave Kochenberger, Mortgage Lender, addresses common questions and offers practical tips for securing the best rate.

Q: What type of rates are involved with mortgages?

A: Unlike auto loans, mortgages are secured by real estate which allows for a longer amortization schedule. The 30-year fixed is the most popular mortgage and this loan would provide you with the lowest monthly payment. Other loan programs are available, but the 30-year fixed is usually the best option for first-time homebuyers.

Q: What factors determine my interest rate?

A: Many factors determine your interest rate, with the most important criteria being your credit score.  Credit scores provide mortgage lenders with the likelihood of the loan being paid back. Higher credit scores present less risk to the lender, which is why they’re willing to offer a better rate vs. a borrower with a low credit score. Other factors include the purpose of the mortgage, the property type used for collateral, and the amount of down payment or equity position of the lender.  Interest rates change daily – these movements in the market are out of our control, but what you can control is your credit score. 

Q: When I look online at interest rates, they are lower. Why is that?

A: These lenders are transaction based – they are not looking to develop a long-term relationship with you. They are most likely advertising loans with risky features – adjustable-rate mortgages, balloon mortgages, or loans with hidden fees.  Regardless of the loan program being offered, the marketing technique is designed to bring in as much volume of transactions as possible. You want to be careful with who you’re working with and often, they are not looking out for your best interest. 

Q: What can I do to get the best interest rate when buying a home?

A: Start with your credit score and make sure it’s as high as possible. Work with a trusted Mortgage Loan Advisor who will evaluate your credit and advise you accordingly. 

From the types of mortgages available to the key determinants of interest rates, Dave has provided invaluable insights into navigating this complex terrain. Remember, while online rates may appear enticing, they often represent the best-case scenarios and may come with additional costs.

Set up a free consultation with a mortgage lender today!

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