Five Ways of Finding Great Mortgage Deals in Today’s Housing Market

For a long time, it seemed like banks were handing out mortgages on silver platters. Even those with not-so-good credit could find a lender who would work with them. This seemed like a dream come true for those who wanted to become homeowners. But when the housing market went south, lenders began to be more cautious.

Today’s housing market is a far cry from what it was just a couple of years ago. Fewer lenders are willing to serve those who do not have excellent credit scores. Those who are fortunate enough to get a mortgage without perfect credit have to contend with higher interest rates.

But looking for a great mortgage deal is not a lost cause. For those with good credit, there has hardly been a better time to get a mortgage. Interest rates are low, and lenders are willing to compete for the business of well-qualified borrowers. Here are five things you can do to get a good deal on your mortgage.

1. Carefully examine your credit report. If there are errors, report them to the credit bureaus. If your credit is less than perfect, start working on building it up right away. Catch up on delinquent accounts, and make all payments on time for a few months. These measures can make a big difference in your interest rate.

2. Compare rates online. You can find rates for many lenders on the Internet, and some websites allow you to compare rates and terms side by side. Even if you don’t like the idea of borrowing from an online lender, you can find rates for banks with branches in your area. At the very least, this will give you an idea of what to expect.

3. Visit some lenders in person. Most offer several different programs, so it pays to sit down and discuss your needs and finances with them. Determine the best deal a lender can offer you, and get it in writing. Then visit more lenders and compare results.

4. Don’t forget the local banks. Smaller banks tend to minimize their losses by only working with highly qualified borrowers. This means that they can afford to offer lower interest rates.

5. Remember that there’s more to a great mortgage deal than a low interest rate. Make sure you understand the terms of the loan, especially when it comes to other costs such as points, closing costs and private mortgage insurance (PMI). If these costs are high, they could negate the effects of that stellar interest rate.

Getting a good deal on a mortgage can be a time-consuming task. But the rewards may be measured in thousands of dollars. In today’s housing market, it literally pays to shop around.