Sounds like the most natural thing in the world. You need a home loan. Perhaps you are purchasing a home. Or perhaps you are refinancing your present mortgage. So you are shopping around. And shopping is important. However, 99% of the home loan “shoppers” start with this question, “what is your rate?”

After all, it makes sense that if you need a loan, obtaining the lowest rate will give you the best deal. Yet, we advise vehemently against starting with this question. Why? Well, let us give you some very important reasons which will help make your shopping experience more fruitful.

First, you are not likely to get an accurate answer to your question. We are not saying that the lender you speak with will be untruthful. However, the answer to the question is much more complex than you would imagine. There are several variables that will affect the rate on a mortgage and some of those variables are not likely to be known by the lender you are speaking to–not without further research.

Therefore, if you do not spend major time with that lender as opposed to “just shopping around,” the lender is likely to give you a very favorable rate quote that is not likely to be accurate. If the quote is not going to be accurate, why not quote the lowest rate possible?

What are these variables? Here are just a few:

  • Your credit score. The lower the score, the higher the rate
    •The amount of your down-payment or equity in the home on a refinance
    •What type of property is being financed
    •The stability of your income
    •Is the seller paying for part of the closing costs 

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