Reader Question: How Do I Get the Best Low Fixed Rate Mortgage?

My post earlier this week, answering a question about mortgage interest rates, prompted another reader question:

What's the best way to get a low fixed rate mortgage on a home purchase? I have excellent credit and a large down payment. I don't know if "comparison" websites like Lending Tree are serving the consumer's interest vs. the lenders.

For something as individual as a mortgage loan, I prefer to shop around locally. Online comparison Web sites can be helpful, and can even help you find good deals. But, and perhaps I am old-fashioned, I prefer the personal touch when I'm getting a home mortgage loan. Plus, those comparison Web sites can't tell you about special loan programs (such as first time buyer) in your state or town. A local mortgage broker or lender can.

If you have excellent credit and a large down payment, local mortgage lenders (especially in the current climate) should be chomping at the bit to give you good terms. If your saved money for a down payment is large enough, you might consider discount points to take even more off the interest rate.

Here are some steps to take when shopping around for a home mortgage loan, looking for the lowest fixed rate:

1. Check your credit score. Have an accurate score from all three bureaus, and take it in with you. Don't authorize any mortgage lenders to pull your credit report at this stage (too many inquiries can be damaging to your credit score).
2. Share how much you can pay for a down payment. Discuss what the lender can do for you in terms of discount points.
3. Find out what home mortgage loan programs are available to you. Ask the lender if they offer green mortgages, or if there is a special deal if you sign up for automatic withdrawal or make 60 payments on time.
4. Make sure (politely) that the loan officers or brokers you visit know that you are shopping around to find the best home mortgage loan deal.
5. Figure out if you can get a 20 year or 15 year mortgage. The rates on those are generally lower, even though you will have to pay more each month. You'll save money in the long run.

Many local offices will be willing to work with you, especially if you show that you will be a solid return. It may take more time that filling out a canned form online, but you just may end up with a better deal.

Heck, fill out the form anyway, and use what you get back. A few more offers won't hurt. Then you can be sure you really are getting the best low fixed rate mortgage.

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