The lowest mortgage rate is a relative term. The lowest rate that you qualify for in your home may be different than the lowest rate that your neighbor qualifies for with the exact same home. The lowest rate may not provide you with the lowest possible payment. A 15 year fixed rate loan will have lower rates than a 30 year fixed rate loan, but your payment will be lower when the loan is spread out over the 30 years.
One good way to find the lowest mortgage rate is to work with a mortgage broker. They have access to numerous lenders wholesale pricing and can get you the lowest mortgage rate.
Most borrowers are looking for the lowest rate possible when shopping for a mortgage. What a lot of borrowers don't realize is that even if they have great credit, assets & income, there are many factors that can affect the rate. Lenders have add-ons to the cost of the rate or to the rate itself. Some items that can trigger an ad-on are loan amount, FICO score, loan to value, waiving of escrows and interest-only payment options. It is important for your loan officer to understand the borrower's scenario before quoting a rate.
There are many factors at play when your interest rate is determined by your mortgage broker.Your Debt to income ratio (DTI) is a major factor as is the amount of assets you have. Credit score is important in the factor but if you have a good amount of assets and good consumer payment history you may still be eligible for conforming interest rates with out a high credit score.
In the mortgage industry, Conforming mortgage interest rates are considered to be the lowest interest rate possible. Conforming loans have one set of qualifying guidelines. In order to get a home mortgage with the lowest interest rate, loan applicants must qualify with acceptable Debt-to-Income Ratio, credit history, property type, residency type, Loan-to-Value Ratio, asset reserves, employment history, etc. Borrowers are penalized with a slightly higher interest rate with each qualification criterion out of the Conforming guidelines.
Just because a mortgage professional quotes an appealing interest rate, it doesn't mean it is the best deal available. If you are rate shopping and the rate is lower with ABC lender than with the majority of other lenders, make sure you pay careful attention to the fees that are being charged. Sometimes lenders will offset the lower interest rate quotes with higher closing fees. Keep in mind that these fees should not be confused with paying discount points to buy down the interest rate.
It is important to decide what loan benefits you the most, rather than what loan carries the lowest note rate. Many times, a greater benefit can be derived from consolidating more debt which will give you a higher discretionary income. Be sure to relay to your mortgage professional what your needs and goals are for your financing options.
Keep in mind that advertised rates and qualifying rates are two totally separate things. Many mortgage companies advertise the lowest rates that may (and in some cases many not) be available but not everyone qualifies for these low rates. These advertised rates usually have very fine print that needs to be read in order to get a better understanding as to whether you will qualify or not. Therefore, if you want the lowest mortgage rate available it is important to shop around with a couple of lenders to see what rate(s) you will actually qualify for instead of basing your decision on who has the lowest advertised rates.
The loan program also has place a factor in the interest rate. In most cases, if a home buyer is willing to give up the security and peace of mind that comes with a Fixed Rate Mortgage (FRM) and choose an ADjustable Rate Mortgage (ARM) or a Hybrid mortgage, he can often get a lower starting interest rate.