How do you find a good home lender? How to find the best mortgage rate? These are some of the questions that popped up in Moolanomy Answers a few times. This is probably a good time to buy a house or refinance your existing mortgage, because interest rates are low and the housing market continues to decline. So let’s take a look at what can you do to find the best mortgage lender and interest rate.

Note: Before I begin, I would advise you not to use mortgage lender or broker recommended by your real estate agent!

Illustration from The Skinny On The Housing Crisis, published with permission. The Skinny On.

1. Federal Housing Administration Home Loan (FHA Home Loan)

First check to see if you’re qualified for a FHA home loan. If you are, this might be the best loan you can get. FHA offers some of the best terms that include: lower down payment, lower interest rate, lower closing costs, easier to qualify, and lower chance of foreclosure.

Click here to learn more about FHA home loan and check if you qualify.

2. Check With Your Credit Union

If you are part of a credit union, this is probably a good place to look. Often, credit union will provide you with a more competitive rate than what you can find in the open market. That’s where I went the last time I refinanced and was able to get a 0.25% lower rate (if I remember correctly).

3. Ask For Referrals

Ask your friends, family members, coworkers, and neighbors. If they know someone good, they’ll let you know. They’ll also be able to tell you about mortgage lenders and brokers that you should avoid. Here’s a testimonial from Fiscal Geek:

My best luck has been asking my friends, relatives, etc. and found an excellent broker from them. Personal referrals from people you trust are invaluable. You might also ask around at Church, odds are you have many brokers there. The bottom line is go in with as much information you can.

4. Check With Your Local Banks And Lenders

Also, you could check with your local area banks and mortgage lenders. The advantage of this method is that you get to talk to them face to face and get a feel for how you’ll be treated. Anyway, don’t feel that you have to commit to anything when you walk in, and be ready to walk out if they pressure you too much.

5. Check Online For The Best Rates

Last but not least, you could check online. There two good web sites that I go to: Bankrate.com and LendingTree. Bankrate.com can give you the latest mortgage rate information, as well as list of lenders and rates based on your search criteria. You start with the list and call them up to get more detail. On the other hand LendingTree ask you to fill out your information once and lenders will call you with their best rates.

Taking out a home loan is a big commitment, so don’t rush into it. Get a feel of the market rate, but understand that you may not qualify for the best interest rate.  Getting the best rate depends on many factors including you debt to income ratio, FICO credit score, assets, and income. If you can’t get the rate that you want, you may have to delay your purchase while you improve these factors.

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