You’ll want to shop around for mortgage rates when you are ready to purchase and finance a house or refinance a mortgage. Every day, lenders set their rates. During a volatile, but not unheard of, mortgage market, lenders can set their rates more than once a day. The Fed does not set the typical 30 year fixed-rate mortgage. It is set by the individual lender. The Fed does influence mortgage rates, but only indirectly. Although some adjustable rates may reflect Fed action, your fixed rate loan is still in the hands of the lender.
How do you compare rates? Here are some things that you should do:
Compare rates the same day.
Mortgage rates are affected by market conditions. A rate quote given on Monday may be different from one on Thursday. To be fair to yourself and to the market, you should set aside a day to shop for rates. When you look at rates on a site, be sure to pay attention to the date that they were posted. You need to make some phone calls if it was posted a few days ago.
Shop at the same time every day.
You can help yourself by shopping the same day. The rate quoted in the morning may be different by the afternoon.
Shop for the same program.
Get a quote only for the exact same mortgage program. You cannot compare the rates of a 30-year loan with those for a 15-year loan, for example. You shouldn’t compare fixed rates with adjustable rates.
If you are shopping in the morning and getting quotes for 30 years, be sure to get the exact program. For example, get a quote on a 30-year loan with a single point. Get a quote for the same “lock” period. Most lenders offer different rate guarantees or locks for different time periods. A lender may offer a 10-day lock, 30-day lock and so on. The longer the lock, the higher the rate.
Compare lender fees. A lender may offer a better rate than others, but they might also charge higher loan fees.
Sometimes it can be difficult to compare apples with apples, but by following these steps you will be able to do just that.