Why Should I Shop Rates?

Do you know the phrase “you don’t know what you don’t know?” Well, it’s true! It doesn’t take Sherlock Holmes to crack the code on the homebuying process, it just takes a quick conversation with your mortgage banker. 

Let’s jump on in with the answer as to why you should shop rates. It’s simple, really. You should shop rates to ensure that you’re getting the best loan that makes the most sense for you and your family. When we say “shop rates” what we really mean is, understanding and being well educated on the different rates out there and how to know when to lock into a rate.

Shopping Rates with Different Types of Financial Institutions

From your local lender to banks or credit unions – everyone operates differently. Understanding why you should shop rates is one thing, but the other element is understanding why each institution has different rates and how they work.

Banks

Full-service banks are federally chartered financial institutions, it’s likely that your bank has a mortgage sector. When you’re banking, checking and have a credit card with your bank it’s likely that you’re already aware of that your bank has a mortgage sector.  There are different reasons why you might choose to get a mortgage through your bank, perhaps it’s easier that way. But you should know that they might not have a variety of loan options for you, some even have stricter lending rules.

Credit Union

Credit Unions and banks are alike in a few ways, but one major difference is that they are non-profit organizations that require memberships. You would need to be a member of the union in order to obtain a line of credit for a mortgage here.

As you can see, there are pros and cons with all these different fiduciaries. It’s a decision you and your family will make based upon your shopping experience.

Mortgage companies

There's another mortgage option you might not have considered - mortgage lenders. These companies specialize solely in loans and keep the origination in house.

Atlantic Bay Mortgage Group falls under this category, we are a mortgage company devoted to lending you peace of mind. We have a variety of loan options for you and we work with credit scores of all kinds, unlike banks or credit unions we are known to close in less time. If we can’t work with your current credit score, we have a credit repair track that we can get you on. This one-on-one service isn’t something a lot of other companies or even banks do, but we know how important homeownership is to you so we are willing to do all that we can to get you into your dream home.

That whole being well-educated thing…

Let’s revisit that “you don’t know what you don’t know” saying. When you speak with a mortgage banker you should know that you can negotiate/buy down points. What are points, you ask? Mortgage points, or discount points are fees paid directly to the lender at closing in exchanged for a lower interest rate. By “buying down the rate” you can actually lower your monthly mortgage payment.

There’s room for negotiation here but what you need to know up front is that there are certain factors you should think about before entertaining this idea. For one, you should determine whether or not you have the funds available to buy down your rate. You’re already shelling out a down payment and closing costs, can you afford this, too? The other part of this is, is it worth it? How long do you intend to be in this property, is this only part of your 5-year plan or is this your forever home? You should figure out where it makes sense. 

It's important that you understand your credit score first then how the rates play into homeownership. When you’re ready to lock into a rate, that means that your interest rate will not change between the offer and your closing date. Since the rates change so frequently, locking into a rate is undeniably important.

Once you do, you’ll have a determined amount of time to keep that rate. Some lock periods can be 30 days, 60 days or even longer. It is important that your lock period allows for enough time to close on your home loan. To learn more about shopping rates, discount points and locking in your rate call us today.