Today’s Best Mortgage Lenders
Here’s a list of the latest mortgage rates from several of today’s best lenders. Click the green button below for a detailed explanation of available refinance rates in your area.
Mortgage Rate Shopping Made Easy
It’s a common practice for lenders to highlight their APR (Annual Percentage Rate) when quoting interest rates. Using the APR to shop for your next home loan might not be the best strategy for reasons I’ll get to momentarily.
One of the most common mortgage mistakes is focusing on getting the lowest interest rate at the expense of fees. Overpaying the loan origination fee or paying unnecessary discount points will drive up your out-of-pocket expenses making it more difficult, even impossible to break even recouping closing costs from your new home loan.
The best way to shop for your next mortgage is to compare mortgage rates and fees that do not include discount points. Mortgage rates are near historically low levels so paying a fee like discount points to get a lower interest rate not only drives up your out-of-pocket costs but reduces the benefit you’re getting from a lower mortgage payment.
You can approximate the amount of time it’s going to take to break even recouping your closing costs by dividing your total out-of-pocket expenses by the amount your payment is decreasing each month. It’s worth noting that this only works if you keep the same term length or go shorter. (That’s 30-year term to 30-year or 15-year home loan.) If you refinance with a longer term length you’ll never break even recouping closing costs due to higher finance charges from those extra years.
What’s Wrong With APR?
The problem with using the Annual Percentage Rate (APR) to shop for a home loan is that it doesn’t give you an accurate comparison of fees across different lenders. There are no standards for calculating APR especially when it comes to discount points. Often the home loan with the lowest APR has the highest closing costs because of the way points are used in the calculation.
Annual Percentage Rate was intended to make it easy to shop for a loan based on fees; however, the way lenders manipulate APR it’s impossible to make an apples-to-apples comparison of mortgage offers.
You can find the best deal for your next home loan by comparing the loan origination fee and estimated closing costs from these lenders’ websites. Base your decision on your total out-of-pocket expenses and payment amount rather than focusing on the lowest mortgage rate or APR.
Here’s another tip: Never agree to pay more than one percent for the loan origination fee. If you don’t have the cash to pay this fee yourself you can accept a higher mortgage rate instead.
How to Get the Best Deal on Your Next Mortgage
You can learn more about paying less for your next home loan by avoiding unnecessary points & fees by checking out my free Underground Mortgage Videos.