How to Find the Best Mortgage to Finance or Refinance Your Home

You shop around for clothing, household appliances and electronics to get the best price, so why not shop around for your mortgage? Essentially, the process is the same, but you can potentially find greater savings once you find the terms that are the most suitable to your situation.

Things You'll Need

• Credit report
• Spreadsheet or notebook
• Newspaper

Instructions

1. Obtain a copy of your credit report from the three credit reporting agencies -- Equifax, Experian and TransUnion. First, make sure the reports are accurate. If there are discrepancies, get these corrected. Don't panic if there are negative items in your report. If there is a good reason behind late payments, like health issues or emergencies, this can be explained to the lender. If you can prove that you are a good risk, you can still get a good interest rate.

2. You will be shopping around with many different lenders to compare costs and terms and negotiate the best mortgage deal. Use a notebook or create a spreadsheet on the computer to record all the information you obtain in your comparison of lenders for your home refinancing.

3. Mortgage loans can be obtained through several different sources including banks, credit unions and mortgage companies. A mortgage broker can also get you a home loan by negotiating for you. Mortgage brokers do not lend money directly, but they do have contacts with multiple sources and may be able to negotiate the best deal. Make sure you know whether or not you are dealing with a mortgage broker because they charge an additional fee for their services. Some banks and credit unions have mortgage brokers in house and you may not even be aware that they are using one.

4. Contact each potential mortgage lender and obtain the following information for your comparison spreadsheet: current mortgage interest rates and whether it is fixed or adjustable, annual percentage rate, points quoted in a dollar amount that you will actually pay, loan origination fees, mortgage broker fees, transaction fees, closing costs, down payment and private mortgage insurance, or PMI.

5. Now that you have filled out your spreadsheet with all of the data you have gathered from banks, credit unions and mortgage companies on your list, it is time to negotiate. Contact each lender and negotiate the best deal, comparing each lender on your spreadsheet. Ask each lender to reduce or eliminate some of the costs. Ask if they can give you better terms.

6. Once you are happy with your negotiated mortgage, ask to lock in the deal. Sometimes you will be charged a fee for this, which can be refunded at closing.

Tips & Warnings

• Check newspapers daily for mortgage rates with different lenders. Newspapers do not show lender fees. It is okay to let lenders know you are comparing them with other lenders and trying to find the best mortgage deal

References

• Bankrate.com: Rate Center
• Bankrate.com: When to Refinance Your Mortgage