Skip to content 
How To Get The Lowest Mortgage Interest Rates
Are you searching for the best mortgage rates but feeling overwhelmed by all the options? Do terms like origination fees, discount points, and closing costs confuse you? Maybe you’re wondering how to compare mortgage rates — apples to apples, or something else entirely. You’re not alone! The world of mortgage rates can be confusing, but I’m here to simplify it for you.
Why Interest Rates Are So Confusing
After 30 years in the business, I’ve had countless conversations about rates. Naturally, everyone wants a great rate, but many people shop for the lowest mortgage rates the wrong way. Here’s a common mistake: most people start looking for rates too early — before they’ve applied or been pre-approved.
The problem is that the rates you see online or hear from a lender are often not the ones you’ll actually get. Here’s why:
No Rate Lock Without Pre-Approval: First of all, lenders can’t lock in or guarantee a rate until you’re pre-approved and we know your loan program. Rates depend on factors like your down payment, credit score, and closing date.
Credit Score Matters: Your credit score plays a huge role in determining your rate. Therefore, until we pull your credit, any rate you see is just a general estimate.
Advertised Rates Are Not Personalized: Additionally, online rates are often “best-case scenarios,” reflecting a 20% down payment, a 740 credit score, and closing in under 30 days. These may not apply to you.
Rates Change Daily: As a final point, mortgage rates fluctuate with the bond market and may change multiple times a day. Thus, it becomes challenging to compare rates between lenders unless all details are finalized.
What You Need for an Accurate Rate
To provide an accurate rate quote, lenders need complete information. Here’s what we require:
- You must be pre-approved.
- The specific loan program must be chosen.
- Your down payment amount must be known.
- Your credit score must be pulled.
- You need to have found your home and be under contract.
- Your closing date must be set.
Without these, any rate you’re given is just an estimate and may not match your final loan.
The Hidden Factors: Loan-Level Price Adjustments (LLPAs)
In addition to the basic rate, mortgage rates are also influenced by “Loan-Level Price Adjustments” (LLPAs). These are additional fees based on risk factors like your credit score and down payment. In fact, 30 different factors can impact your rate. Furthermore, all lenders follow the same guidelines from Fannie Mae and Freddie Mac, so no one can give you an accurate rate until they have all 30 points of information.
To Pay Points or Not to Pay Points?
Another factor to consider is whether to pay points (upfront fees) to lower your rate. This decision depends on how long you plan to stay in the house or keep the loan. The general rule is that the cost of the points should save you the same amount in interest over 36 months.
For example, if paying 1% towards the rate costs $4,000 and saves you $104 per month, it would take 39 months to break even. However, if you refinance or sell the home before then, paying points may not be worthwhile.
Beware of Unrealistically Low Rates
Remember, no one works for free. If a lender slashes rates to get your business, ask yourself why. Often, if something seems too good to be true, it probably is. Make sure you understand all the terms, and be cautious.
Choose a Trusted Expert
As a certified mortgage planner with 30 years of experience, I’ve helped countless clients transition from renters to homeowners and build wealth. If you have questions or need guidance, I’m here to help. I’m Stacey from the Slam Dunk Mortgage Team — making home loans a slam dunk!
