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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: kate_sept2004/Getty Images June 16, 2020 Natalie Campisi is a former mortgage reporter at Bankrate. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. can be key players in identifying the best home loan for their clients. As the conduit between lenders and borrowers, mortgage brokers offer clients multiple options when it comes to choosing a rate and a lender. The broker gets paid by either you or the lender as a percentage of the loan amount, typically in the 1 percent to 2 percent range. Why use a broker then? Because they may have access to some great rates. For example, , which provides loans through brokers, in May began offering interest rates as low as 2.5 percent for 30-year fixed purchase mortgages and refinances. Not only do brokers submit interest rate options to their clients, but they also help navigate the many loan choices, from term to type. So, whether this is your first mortgage, a refinance or you’re an old pro at this, there are three basic questions every borrower should ask their broker. 1 What is the right type of mortgage for me
Like cars, every mortgage type will get you to the same place (buying a home), but the ride will be different. Your broker should understand your financial situation before recommending the best for you. For example, someone who wants to minimize interest and pay down their mortgage faster might be better off in a 15-year mortgage. However, that option is not ideal if you plan on selling the home in a few years. Likewise, someone who has credit challenges or a smaller down payment might do well to explore FHA loans. These are important details your broker will assess to identify the best mortgage for you. A good broker will be able to match a mortgage with your short- and long-term goals. If your broker is quick to put you in a loan that doesn’t fit your situation, keep shopping around. 2 How much will my mortgage cost
A mortgage broker is required to itemize all their fees upfront and not charge any more than the stated amount. Pay close attention to the interest rate of the loan and any other fees and costs charged by the lender. Then compare these figures with the other all-in costs of a mortgage from at least several lenders. Mortgage brokers are required to provide you with a loan estimate per Consumer Financial Protection Bureau rules. An estimate requires, at minimum, the following borrower information: Social Security number Income Property address Appraisal Loan amount requested The more information you provide, the more accurate your estimates will be. A loan estimate should include mortgage interest rate, as well as costs of closing, taxes and insurance. It should also include the estimated monthly payment. Based on the figures you’re given, you can see how that fits into your budget and you can also comparison shop. If the amount is too high, ask your broker about other available options (for example, FHA loans or local first-time homebuyer programs). 3 Should I use buy points or make a larger down payment
There is no single answer to this question, but your mortgage broker can help you understand the pros and cons of the different options, such as . As a general rule, it’s never a good idea to drain your savings for any purchase, including a house. Most experts agree that folks should save enough to cover between three. That means you should include your soon-to-be mortgage payment in your emergency-fund calculation. The more information you give your broker about your goals (do you want to invest your money, start a business, buy a second home) and future plans, the better they can help you strategize how to approach your mortgage. For example, homebuyers who don’t plan on staying in the home long-term might not want to (which push your interest rate down). Since you won’t have that mortgage for 30 years, the amount you spend on points will likely outweigh what you save on interest. The same goes for a . Typically, conventional mortgages require private mortgage insurance of the purchase price. PMI costs somewhere .55 percent to 2.25 percent of the purchase price annually until your equity in the property reaches 20 percent. This means you could pay $100 or more per month extra. However, if putting down 20 percent means using all of your savings, then you might want to explore other options. There are some lenders that don’t require PMI as well as certain loan types, like VA loans, that don’t have this insurance. Be sure to find out what you qualify for before you get locked into a loan. Before you choose a mortgage
A mortgage is a long-term commitment, so do your research before you sign a contract. Find out what the for the type of mortgage you want is. Rate tables are a great place to start, as they give you a snapshot of what multiple lenders are offering. Bankrate updates their rate tables regularly, so you can check here to get current information. If your broker is providing estimates that are not in line with the average rate, find out why and what you can do to get the rate you’re after. When it’s time to select a mortgage broker, make sure that they come with recommendations and have substantial experience. Good brokers will collect important information about your finances as well as your goals before making recommendations, so if a broker pushes you toward a loan without knowing these things, then a red flag should go up. Featured image by Kate_sept2004 / Getty Images. Learn more
SHARE: Natalie Campisi is a former mortgage reporter at Bankrate. Related Articles