The Best Fixed Mortgage Deals – How to Pick The Best For 2018

the best fixed mortgage deals

How to Pick the Best Fixed Mortgage Deals

Buying a home is one of the significant financial obligations in life. For most Americans, getting a mortgage is the only convenient way to be a homeowner. Unfortunately, there are so many things that lenders consider when reviewing loan applications from borrowers. Some of these factors include credit score, credit history, mortgage points, income, and loan amount.  The good thing is that the interest rates have been dropping from 10.32 percent in 1989 to 3.65 percent in 2016. As of 2018, the rate offered by many lenders averages at about 4.5 percent for a 30 year fixed reate mortgage. But still, it makes sense for some new home buyers to find the right mortgage that suits their needs. Here are killer tips for getting the best fixed mortgage deals when considering buying a home.

the best fixed mortgage deals

Let’s dig into them!

Take this way; purchasing a home is a goal. It requires planning, saving and making the right due diligence. It’s not an undertaking that you can expect to land the best deal with a single shot.

1. Early preparation helps

 

 

Moreover, mortgage rates are dynamic thus tend to change almost dramatically and unexpectedly.

First, you need to get your financial life right. Get it into shape before making your first move.

Your credit score needs to be outstanding. Lenders usually consider borrowers who have a score of at least 700. For a prime mortgage rate, think about getting a score of 740 or above.

The Federal Housing Administration may have relaxed standards, but their conditions are strict. Try as much as possible to pay off those credit card balances and personal debts.the best fixed mortgage deals

Additionally, save as much as you can, so that you can put down a significant amount. Typically, the higher your down payment, the lower your mortgage payment and the less interest you will pay over time.

When you are ready, make your move.

2. Compare the best fixed mortgage deals

However basic it may seem, comparing rates from different lenders is still an important tactic for those who want to uncover the best deals.

Keep in mind that lenders are eager to attract as many clients as they can, so it’s obvious that they will be making their rates irresistible and compelling.

In most cases, when working with a real-estate agent, they are usually swift to close the deal. If you are a first-time buyer, trade carefully and don’t be hasty to accept the first recommendation you get.

You can use an online mortgage rate calculator to find the best fixed mortgage deals. Compare all the top lenders and find out one that you feel is the right choice.

Take ample time to review each lender’s rates before you finally settle for your preferred option.

3. Get help if necessary

If you are new to this whole fixed mortgage thing, it won’t hurt to get help from friends, colleagues or family members.

You must have at least three or more people in your life who have already purchased or refinanced a home using a fixed-mortgage, right? Such people can be helpful in pointing you in the right direction.

chalk board with words help

They can share their experience on the lending process and give insights into finding the best deal. You can also understand their mistakes, if any, and find ways to make sound decisions.

Approach different lenders if possible and let them recommend a lender they think will be ideal for your unique situation.

4. Understand private mortgage insurance

If your down payment sum is less than 20 percent of the borrowed amount, your lender may need you to get private mortgage insurance or PMI. In such a situation, the lender sees you as a higher risk.

With a PMI, you are a safer bet for the lender, but the problem is that you are responsible for paying for the insurance.

Luckily, there is good news. You can kick the insurance in the face and get rid of it.

But how?

Strive to accumulate enough equity in your house by making full and timely mortgage payments. Experts recommend paying your mortgage balance up to 80 percent of the appraised home value.

At this point, your lender has no choice but to eliminate the PMI.

5. Watch out for hidden fees

Getting the best fixed mortgage deals is a time-consuming affair, and there are a few hurdles on the way.

Be wary of those low advertised rates; there is always a catch. Don’t just fall for them because of what they promise.

Take ample time to break down the closing costs before picking any lender. Always strive to give the lender all the necessary information upfront to allow them to give the best possible quote.

Closing costs generally account for 2 percent to 5 percent of the price of your home. For example, if the price of your home is $150,000, the closing costs can range between $3,000 to $7,500.

That’s a significant sum, so it helps to know what your lender charges.  Watch this great ex-plainer video that does an excellent job of explaining the loan origination process and to learn all about closing fees and costs.


Watch This Video To Completely Understand Loan Program Fees


6. Make your decision

At this point, you have listed down some of the best fixed mortgage deals you have found. That’s pretty great.

So, you should try narrowing down to that single lender that appears suitable for your particular situation. Of course, you should consider all their cost and terms.

Also, don’t be fooled by the points even though they boost your closing costs. They can be a good idea if you will be staying in your home for a long time.

It is also an excellent idea to price out different lenders at the same time. This will allow you to get the best comparison possible.

Consider all the different loan types, including 30-year fixed, 15-year fixed and 5/1 ARM, and determine what suits your financial state. The 30-year fixed option is the most expensive plan because it has the highest rate and you are paying for an extended time.best fixed mortgage deals

Ideally, you need to choose an option that suits the period you intend to stay in your house.

Enjoy your new home

The overall idea is that getting the best fixed mortgage deals requires time and efforts. They just don’t come to you.

Shop around to land the best rate and make the right moves. Remember, you need to prepare well enough before applying for a mortgage.

Don’t overpay for your mortgage and don’t pay for a plan when you don’t need it.

When you finally close the deal, sit back and enjoy your accomplishment.

A start of a new life!

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10 Comments

  1. This post is very timely for me as I am looking to purchase a home, and I was not aware of the PMI Insurance that is required for a deposit of less than 20%.

    I also should check my credit score, and I understand now that the credit score will affect my ability to get a good mortgage rate.

    Great suggestions and thank you.

    • Hi Amy – I’m happy to hear the post was helpful. It is true that many borrowers forget about some of the extra expenses incurred when applying for mortgage financing.

      Particularly Private Mortgage Insurance (PMI). If your Loan to Value Ratio LTV is greater than 80% then you are required by your lender to pay this monthly.

      If you can manage to put more down and get under the 80% threshold that would be the best way to go.

      However most folks are not in a position to place that much money down at closing. So if you have PMI I suggest you pay principal down as fast as possible.

      Keep an eye on your balance and when you get close to the 80% threshold call your lender and ask them the steps you need to take to remove the payment.

      Patrick

      Credit Squared

  2. wow. excellent review with great points to think about. we are in a search for a house and there are so many things that I now understand that we didn’t take into consideration and so I guess I’m going to read all that information over and over again as I have so much to learn. thank you.

    • Thanks for commenting. There is a lot to consider when you are looking for a loan. Down payment, interest rate, private mortgage insurance (PMI), loan fees and much more.

      It pays to do your research before you start looking. Most important of all, know your credit score and try get to 740 or above or you will end up paying a higher rate.

      Glad you enjoyed the post and found it helpful.

      Patrick

      Credit Squared

  3. Thanks for the article. Yes. I can say Amen. But if there is one thing I can underline is number 5: watch out for hidden fees! This is the one matter you can fall deep into the pit. I’ve paid 7.5% in closing… This was not nice. And I could only blame me – I didn’t ask the questions as I should… But I ask myself over and over again: what are the questions?

    • 7.5% seems a little high to me. You should have received a CD (closing disclosure) detailing the fees you were required to pay when you applied for your loan.

      You should have also received a HUD-1 from your lender at least three days before your scheduled closing.

      With that information in hand you may have been able to negotiate and get some of the fees reduced.

      Many times lenders don’t want to loose you as a customer, as they get the serving fee income after closing the loan, so there is always room to negotiate.

      If you didn’t get a chance to read this linked article https://www.zillow.com/mortgage-learning/closing-c… in my post, regarding closing costs, I would recommend going back and reviewing it. Next time you look for mortgage financing or decide to refinance, this info may come in handy.

      Seek professional advice (quite often your realtor) next time you go loan shopping. They should be able to tell you if the loan fees you are paying are reasonable.

      Patrick

      Credit Squared

  4. I have been considering getting a mortgage for a while now and have even talked to a couple of people and institutions about it.

    But the problem is, up to now, I haven’t really gotten the accurate kind of results that I’m looking for. Someone told me that I needed to pay to get the exact information I need.

    Do you think it’s worth paying for that information? I have tried online research but none is as specific as I want. What are your suggestions?

    • Dave – Thanks for your question. I would definitely not pay for the advice you seek. I do understand when you are first starting out it is difficult to sift through all the information to get the right answers.

      If you are serious about buying a home and you are ready to move forward you should find a good buyers agent. They represent you in a real estate transaction and are paid by the seller, so there is no cost to you.

      You need to choose one that has been around for awhile and has good contacts with mortgage loan officers, title agents, and other real estate professionals.

      A good buyers agent should be able to answer most of the questions you have. Please avoid anyone that has not been in the business very long.

      Before you engage a buyers agent:

      Know your credit score. If you have one in the mid 700’s you should be able to get the best rates available.

      Know how much you can afford and make sure you have saved up enough to put down a good down payment.

      Research all the fees you may be required to pay at closing and ask your agent to explain everyone one of them. Here is a list of them located at this link. Closing Costs. And remember some of these are negotiable with the lender you choose.

      Research all the other expenses you will have like taxes, insurance, maintenance etc. Many people make the mistake of not considering the true cost of owning a home and get in over their heads.

      Good luck.

      Patrick

      Credit Squared

  5. Hi Patrick,
    Thank you very much for your information. Fixed rates seem to be the way to go when considering a long term mortgage.
    I appreciate what you wrote about preparation and shopping around for the best rate. knowing there were a variety of options, my realtor did most of the work for me when I purchased my first home at 13% interest (1978). That may not have been the best idea for us.

    Now that it is easier to make a comparison, it empowers the homebuyer to be a more educated part of the process.

    Do you agree that when considering a home purchase, one should alway consider carrying a mortgage? Thanks for any input you may have.

    All the best

    • Hi –  Thanks for commenting.  Very true that it’s much easier today to comparison shop.  Back in 1978 there wasn’t much available to help you make a decision other than your agent or a mortgage broker. 

      13% seems like a staggering interest rate, but the average interest rate for a 30 year fixed rate mortgage back in 1978 was 10.35%.  So not too bad for a first time home buyer.

      Carrying a mortgage has it’s benefits when it comes to tax advantages, so if you have to carry one there is at least some benefit to reducing your overall payment by taking the deductions (if you itemize) for interest and real estate taxes.

      If  you have the means to payoff your mortgage outright, I would seriously consider it.  Here is a post I wrote regarding the tax benefit myth, that may change your mind about carrying a mortgage.

      https://creditsquared.com/pay-

      Patrick

      Credit Squared

       

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