Buying your first home takes a seemingly endless number of steps, but shopping for the best mortgage rates on the internet is one that you can easily tackle yourself. While some people may choose to work with a mortgage broker to find the best interest rates available, shopping for interest rates online is another great option – especially if you have a relatively simple financial profile.
While you have no doubt heard of online mortgage rates, you are probably not sure where to start. After talking to top mortgage experts, we’ve compiled a list of everything you need to know to find the best mortgage rates online – plus tips to make the process easier. Here’s our quick and easy guide to finding the best mortgage rates online.
What it means to buy mortgage rates online
Much like any other research online, buying mortgage rates online is all about using multiple resources and comparing your offers before making any decisions.
“Online shopping plans are a quick and easy way to give you a rough idea of the plans you will qualify for,” said James Surrey, founder of Review Home Warranties. “The key word here is ‘gross,’ which means it has a pretty broad spectrum. While online purchases are a good place to start, they don’t provide a more detailed assessment of your eligibility. “
By submitting basic information like your name and credit history on third-party websites like LendingTree, or even directly on lender websites, you can find out what mortgage rates you might qualify for. This is helpful for anyone who is at the early stages of buying a mortgage. However, as Surrey said, these online listings are no guarantee that you will actually secure the same mortgage when you finally apply for them.
The reasoning? Applying for a mortgage is a more involved process, with experts assessing your entire financial profile. You look at things like your income, your assets, and your outstanding debts – all of which tell lenders more about your debt to income ratio, also known as how much debt you owe compared to your income. Only when all of these things are considered can you be officially approved for a mortgage, and this will be done directly with a lender later in the process.
Who will benefit from online shopping?
Now that you know a little more about starting your mortgage search online, let’s talk about who this strategy is best for.
Buyers with good credit ratings
Shopping for mortgage rates online becomes much easier for buyers with above-average to good credit scores. If your creditworthiness requires some TLC, it would be better to contact a mortgage broker or lender directly as they can likely help you find the best deals faster.
“If you find yourself in a unique, atypical financial situation, such as self-employed, buying a very unique home, or having poor credit, online lenders are less likely to be able to offer a mortgage that suits your needs “Said Scott Nelson, CEO of MoneyNerd.
Buyers with typical finances
As Nelson said, the simpler your finances, the easier it is to find competitive mortgage rates online. Because many of these online mortgage rate tools use standard (and basic) information to calculate quotes, they can’t take anything unusual into account, such as: B. if you have a lot of debt or need to borrow a jumbo loan. This also doesn’t apply to homebuyers who have less than 20% down payment. Most of these online tools assume that buyers are in excellent financial position. So, if your finances involve something out of the ordinary, it might be best to contact a lender directly.
Buyers who want a standard mortgage
Similar to those with good credit ratings and those with typical finances, buyers looking for a standard 30 year mortgage also find it easier to find interest rates online. Most of these online tools use standard mortgage offers by default. This means you are more likely to find a loan that will work for you if that is the type of mortgage you want.
How to buy prices online
One of the best ways to start shopping for mortgage interest online is by using a third-party website. While you cannot borrow directly from these websites, they do provide a thorough review of the best home loan offers available.
“Sites like NerdWallet and LendingTree have mortgage calculators that are free and intuitive to use,” said Surrey. “Just fill in basic information like your budget and creditworthiness and you’ll get a wealth of personalized information about potential plans to which you are eligible.”
Once you’ve found some great deals, it’s time to reach out to the lenders directly. It is possible that they beat you by this step, but in any case, it is important that you contact the lender directly to make sure that you actually qualify for the rates originally offered. At this step, you will likely need to provide more personal information such as proof of income, assets, and outstanding debts. With this information, your lender (or mortgage broker) should be able to tell you how close they can get to that initial offer.
More insider tips
One way to ensure that the online information is up to date is to check the release dates. “When you look at a mortgage comparison website, look for a release date,” Surrey said. “Mortgage providers change their rates and policies frequently, so information outside of the provider’s official website can quickly become out of date. If you see an interest rate on a review or comparison page, visit the official mortgage website to verify the information. “
Remember that your final offers will ultimately depend on your full financial profile. “Note that the interest rates shown typically only apply to people with an existing high credit score, typically above 700,” said Surrey.
Nelson made a similar cautionary note. “Companies often promise fantastic upfront interest rates but don’t enforce them once they’ve seen your creditworthiness. Don’t be fooled by such offers or you will waste a lot of time, ”he said.
The bottom line
Shopping online for mortgage rates is a great way to understand the type of mortgage packages you may qualify for. Be aware, however, that these initial quotes may not be the most accurate. Since applying for a mortgage is a more laborious and multi-step process of verifying your financial information, you will need to contact the lenders directly to get approval for the interest rates found online.
However, if you start your mortgage search online early on, you will have a much better idea of the types of loans (and interest rates) you can get – and will be better prepared to actually fund those efforts when you are ready to move on with your mortgage .
Larissa Runkle is an employee of The Penny Hoarder.