If you’ve seen an advertisement for a mortgage rate that is far lower than what your lender quoted, you’re not alone!  Banks and lending agencies often advertise the “best available” rates, which may not be achievable for all buyers.

Here are the three things that can greatly deflate mortgage rates — and why you may be paying more (or less!) than your neighbor:

  1. Points.  Purchasing points for your mortgage is a way to essentially buy down your interest rate, by paying for some of the fees upfront.  Because mortgage rates are hovering around 3.50%, points aren’t currently a very popular option for most buyers because rates are low enough as-is — but lenders may advertise low rates with points included.
  2. Credit score matters!  Banks typically advertise the best available interest rate for the most qualified buyers.  While mortgage loans are available for buyers with credit scores as low as 580, the rate becomes significantly more affordable when the buyer has a score of 725 or above.
  3. Fees, fees, fees. Some lenders charge higher application fees, whereas boast having zero fees (but may have a higher interest rate!).  Be sure to carefully compare lenders to determine what makes the most sense for your budget.
  4. Time…and luck!  Mortgage rates change daily, meaning that you could pay quite a bit more or less.  In fact, in less than a day, rates dropped to their lowest level in years following the UK’s Brexit announcement!  Your lender can help you to decide on the best time to “lock in” your rate (during the mortgage application process).

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