Not Your Neighbor’s Mortgage: What Separates You from the Mortgage Rate You Want

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Put your imagination hat on for a second. Imagine that you and your neighbor are both buying a house. The price is identical, and you're both putting 10 percent down. Your lives and home buying scenario are nearly identical, except for one little difference -- your neighbor's credit score is a 741. Your credit score is a 738.  

So what? That shouldn’t make a difference, should it? Well, it does. You two aren’t likely to get the same rate simply because of a mere 3 points. These 3 points could put you under the requirements to receive the advertised interest rate, meaning you need to ask more questions than someone with a 740+ when calling around for rates. 

Close the Gap Between You and Your Neighbor: Get as Detailed as Possible

To know what you can expect in terms of your rate, you need to tell the lender everything you know. "I'm going with an FHA loan. I want to put down 3.5 percent. My credit score is between 640 and 660. I am closing in 60 days. I want to purchase a house for $250,000, and I don't want to pay any points.” 

This information will help you get the most accurate rate for your situation, and you won't be surprised later with a rate change. Feel free to specify what is most important to you. For example, you might want the lowest closing cost or the lowest cash out of pocket, or maybe the rate is most important to you. 

Beware of Neighborly Advice

The second you say you're buying a house, your family, friends, and co-workers all become instant experts in home loans and financing. They want to help you, but your mortgage is not your neighbor's mortgage. Their experience was likely drastically different than what you can expect, so be aware that their experience will most likely not be your experience. 

Licensed mortgage loan officers go through exhaustive training and exams that many professionals fail. There are also continuing education courses that officers are required to take. Although your neighbors may be able to provide you helpful advice, they don’t have the perspective, expertise, or experience to help you properly during this journey. 

Take advice from trusted professionals who want to partner with you to guide you towards the best possible outcome. Ask questions and have a clear understanding of what you're doing and why. Take the help that friends and family offer; just take it with a grain of salt if they're not a licensed professional. 

I highly recommend reading "Why Was Jerry's Rate so Much Lower" by Ted Rod published by Mortgage Daily News on May 3rd 2016.

Now take your imagination hat off and let’s get down to business.