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I'm about to make an offer on a home and just spoke with a mortgage broker. The loan is going to be fairly standard for my area but "high-balance". She told me the best rate she can get is 4.75% which seems reasonable, but then I searched on line and it and it looked like rates were at 4.50% (or even lower in some cases) but that is a search, how can I get a reasonable understanding that her rate is good or bad? is the only way to go to multiple brokers? I don't really need multiple pulls from brokers on my credit.

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    Do you have a local bank/credit union that offers mortgages? – mhoran_psprep Aug 22 '18 at 13:17
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    I believe that if you have multiple pulls for mortgage shopping, if they are within 2 weeks of each other, they count them as 1 pull, and the ding to your credit is negligible. Plus hard inquiries will only stay on your report for 2 years, afterwards. If you don't have any plans for additional borrowing over the next two years, then you really shouldn't be worried about a few extra pulls. – Kora Aug 22 '18 at 14:13
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    If you're looking for an opinion then 4.75% seems within the "margin of error" in regards to a good rate especially given that we don't know what "high-balance" means, we don't know your credit score, and we don't know what bank offered this to you. The only way to know is to get competing offers and pick the one you like. – MonkeyZeus Aug 22 '18 at 17:30
  • Probably goes without saying, but for future reference, interest rate is only one consideration when choosing a lender. Understand closing costs, and very important - closing speed. – JPhi1618 Aug 22 '18 at 18:11
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To quote the poet Robinson... You better shop around.

Talk to a few other banks and brokers, tell them what rate you want, and if they can't get it don't bother applying.

However, online "rates" are generally lower than you actually get - they are enticements to get you to apply with them, and there's always some reason that you don't apply for the best rate (or the rates have "moved overnight"). Also be very aware of rates that cost "points" (which is basically just pre-paying interest upfront).

If you're worried about pulls on your credit, know that credit scores are modelled to allow a bit of "shopping around", the impacts are temporary, and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways.

  • Aren't you giving potentially bad advice? "and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways." So someone with less than stellar credit may be reducing their credit score by shopping around for a rate they'll never qualify for. – Johnny Aug 22 '18 at 22:37
  • Speaking as someone who got a mortgage this year in Michigan. I shopped around on rates, and each subsequent "Hard Pull" within 45 days of the first had almost 0 impact on my score. I will note that a mortgage pull is different from, say, an auto financing pull, and will be treated separately as such. – GOATNine Aug 24 '18 at 16:26
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The mortgage broker should be running your information through several mortgage companies. That is their job. The broker should be able to provide a listing showing the basic parts of these different companies offers. They should also be able to show how items such as the down payment can change the terms of these mortgages.

As other answers have mentioned multiple pulls in a short period of time don't cause your score to drop. The model knows this is the only way to compare rates. Though if you do this again just before you close on the house will make your lender nervous. They fear you will switch lenders, or about to make another large purchase.

The rates offered are a function of down payment, credit score, debt to income ratio. These different loans can also include interest rate buy downs and other exotic options.

You should review the range of mortgage options provided by your broker to make sure that you are picking the best one for you.

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Rates can also be impacted by how much you put down, it used to be that having less than 20% meant you had to pay for PMI (private mortgage insurance) also. Your lender may also put your local/property taxes into your monthly payment and hold it in escrow, to ensure it was paid out quarterly on time. Those other costs would increase your total monthly payment. If you can afford to pay bi-weekly (every other week), you can pay off the mortgage sooner as well. When I was younger, we started out with a 30 year fixed loan, and arranged biweekly payments, so our loan would have been paid off in 21 years, saving us a ton on interest. We refinanced later when rates dropped, but kept the same payments, and ended up being paid off in 15 years. The result was we paid less in interest than the house cost, vs something like 3x in interest of the house value.

  • "it used to be that having less than 20% meant you had to pay for PMI" - has this changed? I was under the assumption that this was still true. And even worse, if you have an FHA loan then you have to pay MIP for the life of the loan, whereas otherwise lenders are required to drop the PMI payment when your loan-to-value ratio drops below 78% – Glen Yates Aug 24 '18 at 19:19
  • I can't say. We've been mortgage free since 2003, 2005, somewhere in there. Still stuck with house insurance (and save there with 2 cars and house with same carrier); and quarterly property tax, but that's less than 1 mortgage payment was. – CrossRoads Aug 24 '18 at 21:14
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I had to answer because nobody called out the obvious.

Interest rates themselves are the same for all lenders. The difference is fees and how much closing costs you want to finance. The more closing costs financed the higher the rate.

Things to understand about what impacts your interest rate:

- LTV = Loan to value.  The higher the LTV the higher the hit to the rate.
- Credit Score = lower the credit score the higher the hit to the rate
- Mortgage product - Conventional, FHA, VA 
- Term
- Escrow waivers
- many more factors and some are on a lender by lender basis that's why shopping around is important

Watch out for the fees or variable things impacting the rate. Most buyers are unaware on how much impact to the rate they can control. House value, sometimes waiting for a better credit score, higher down payment, paying your closing costs all would impact your rate.

Important thing to remember is to find a mortgage broker you can trust and shop around like crazy. Ask for GFE's and compare them all. If anyone doesnt provide one to you you're red flags should go off.

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