How to find the cheapest mortgage

Purchase a mortgage from various lenders, including banks; mortgage brokers; online originators, such as Quicken Loans; and aggregators, such as LendingTree. Go to their websites and fill out preliminary forms to get immediate interest rate estimates or calls from company representatives who can quickly get quotes for you. You can also head to Bankrate to compare mortgage rates and find the best deals.

When we did this, we quickly found lower rates at various banks. Bankrate’s average mortgage rates, gleaned from over 100 banks, averaged 4.88%, but online mortgage broker Morty was advertising a 30-year fixed loan with an annual effective rate (APR) of 4.285%. Wells Fargo offered a 30-year fixed rate mortgage with an APR of 4.625%. (Freddie Mac, the quasi-government agency that buys and aggregates mortgages and sells them to investors, has pegged the current average 30-year fixed rate at just under 5%.)

Another option is to find a phone number on the lender’s website and call directly. We’ve found that you can get fairly accurate estimates over the phone. If you want a quote that can lead to a binding offer, you will need to give the lender your social security number.

Before you start looking for lenders, decide what type of home you’re interested in and what type of mortgage you want. You will also need to let the lender know where you are in the process. Are you just starting to shop for a home, or do you have an accepted offer or signed contract?

Once you start filling out loan applications, you will need to check many aspects of your financial and personal life. Make sure this part of the process goes seamlessly by having all your essential documents on hand. Refer to Zillow’s checklist of what is generally required.

Ask each lender for a “float” option on your mortgage, says Keith Gumbinger, vice president of HSH, a mortgage information website based in Riverdale, NJ. With this option, your mortgage rate drops before closing if interest rates drop, even if you’ve already locked in the rate. Although the feature usually requires a fee – perhaps $500 – it can save you big if interest rates drop. “Flutters aren’t uncommon, but people need to ask about them,” Gumbinger says.

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