Many savvy New Jersey home buyers are very interested in getting the best rate on their future mortgage. After all the difference between a 5.25 and a 5.5% interest rate on a $400,000 loan can be as much as $1000 per year or $84 per month. A wise home buyer certainly will contact a few Mortgage Companies to find the one with the best terms.
Unfortunately what many New Jersey home buyers don’t know is that every time your credit report is pulled, it could and likely will lower your credit score temporarily. Most (all that I know of) New Jersey lenders use this credit score to determine which rate class they are going to offer you. Hence before quoting you a rate, they want to pull your credit report to gain your credit score. If you contact 5 lenders and all five run your credit report, you will find that your credit score is adversely impacted.
So, how should you shop for the best rate?
2. When you then contact other Mortgage Company, do NOT provide them with your social security number. Give them your FICO score instead and ask them for their rate.
3. Once you have called around and found the best rate, you can usually contact the first company you called and ask them to match it. If they can’t beat the first lender, you can then provide your Social Security number to the other Lender for them to guarantee their rate.
As you shop for rates, there are many other things to consider including the fees, prepayment penalties and the flexibility of Local Lenders versus Internet based Lenders. Lastly, remember that until you lock an interest rate, it can change.
Shop for the best rate with your credit score not your social security number. Happy Hunting!
James Boyer REALTOR, Morristown Real Estate for all your real estate needs, and all the homes currently listed for sale in the local New Jersey MLS visit Morristown NJ Real Estate.
8 responses so far ↓
1 Jayson (1 comments.) // Feb 28, 2008 at 8:07 pm
These are good tips. It’s incredible how interest rates affect payment and even more incredible that many people don’t realize that the difference is so significant.
I wasn’t sure if a company would quote you off of your FICO score. thanks for clearing that up
2 Ben DeBell (4 comments.) // Feb 29, 2008 at 12:22 pm
Great advice. I would add that credit reports are often riddled with errors (especially with identity theft so prevalent today). Homebuyers will want to not just pull up their credit reports, but also fix any errors they see there. It is also a good idea to work on improving your credit rate in the months and the year before you apply for a home loan: pay bills on time, pay down debt. It will go a long way towards getting you a better rate.
3 Team Aguilar (1 comments.) // Mar 1, 2008 at 9:31 am
good tips for buyers.
4 Jennifer (1 comments.) // Mar 2, 2008 at 7:58 am
Thanks for providing this information to home buyers James.
Just to add a little something: In todays world it is also imperative that consumers keep close tabs on their credit and we wary of identity theft. They can do so by joining one of several agencies that track this information.
This will not only give the consumer a “heads up” about fraudulent activity regarding their credit, but also provide them information to assist them in controlling their credit scores.
This in turn will enable consumers to receive better mortgage rates when applying.
5 Ben DeBell (4 comments.) // Mar 7, 2008 at 10:56 am
Great advice. If I could add one more piece of advice: I would tell buyers to not be afraid of negotiation. First time homebuyers, especially, are reluctant to negotiate rates, assuming that the rate a lender quotes is the best rate possible. This is not always the case. In fact, if you have a better rate from another lender and ask your bank or lender “Can you better the offer I received from lender B?” you will often get an even more competitive rate. Lenders want your business, after all.
6 Dallas Homes (1 comments.) // May 13, 2008 at 8:20 pm
Great post. This is a very simple concept, but that’s what makes it so powerful and easily repeatable by anyone who wants to use it.
Smart Comparison Mortgage Shopping. Love it!
7 Johnnie (1 comments.) // May 26, 2008 at 5:17 am
I’ve been trying to buy a home in New Jersey for a while now, but i keep getting turned down due to my credit rating. And the companies that did approve me i decided not to accept the approval because of the high interest rates. Is there any way to get a good APR with less than perfect credit?
8 James (12 comments.) // May 26, 2008 at 8:02 am
Credit ratings are king these days Johnnie. If you have poor credit and you still have mortgage companies offering you mortgages I would suggest you accept one of them if you want a home to buy.
Leave a Comment