How To Shop for Mortgage Rates Online

Buying a house is a serious financial decision, and most people don’t take it lightly. They put time and energy into understanding their various home loan options, and they explore the interest rates they’ll need to pay. The goal? To save as much money as possible in making this at-least-six-figure purchase. 

If you’re in the beginning of your home shopping journey, you might be wondering how to navigate what’s ahead. To help there, our team of mortgage experts laid out this three-step plan. 

#1: Understand the market

The mortgage market — that is, how much you’ll pay in interest — changes just as much as the housing market itself. Here’s the good news. While rates late last year were as high as they’ve been in two decades, they’ve started to come down. 

Plus, with the Federal Reserve predicted to cut their federal funds rate later this year, mortgage rates should follow suit. 

All told, mortgage rates are continually on the move. If you want to buy your house at the most financially advantageous time, it pays to keep a finger on the pulse of that movement.

The Consumer Financial Protection Bureau (CFPB) offers a rate exploration tool you can use here. Choosing your state from the drop-down button and moving the toggle to your credit score gives you the best idea of what you can expect. (If you don’t already know your credit score, you can request your free credit report here.)

Interest rates vary from lender to lender — and based on how that lender views you as a potential borrower. Still, having a decent idea of the current mortgage rate environment in your state helps you pinpoint which lenders could work best for you.  

#2: Compare your options

Once you have a rough idea of what kind of mortgage interest rate you’ll be charged, it’s time to start looking at individual lending institutions. 

The right lender for you depends on your preferences. Here are a few things you might want to consider:

• If you like talking with someone in person, it makes sense to explore lending institutions that have branch locations in your area.
• If you want to get a low rate, check with credit unions where you can gain membership. 
• If you like your bank, see if they offer mortgages.
• If you prefer to do everything online, look for lenders that offer a personalized rate quote on their website — that often indicates that they have the tech know-how to handle things digitally. 

In 2024, most lenders publish their current mortgage rates on their websites. Looking around can help you get a feel for which institutions offer the best rates. 

Some lenders pull a little bit of trickery to try to make their rates look better, so be wary. Specifically, look at a lender’s annual percentage rate (APR). That represents what you’ll pay for the loan each year, including any fees the lender charges. Some lenders offer low interest rates but make up for it with a wide range of fees. As a result, the APR gives you the clearest idea of what the home loan will truly cost you. 

As you’re looking at rates online, also keep an eye out for something called points. Mortgage points give you a way to buy down your interest rate by paying money upfront. Each point usually costs 1% of the total loan amount and lowers your interest rate by 0.25%. 

Chase, for example, is currently advertising a 30-year fixed-rate mortgage with an interest rate of 6.875%. But if you read the fine print, you’ll see that one mortgage point is applied. In reality, then, unless you cough up extra money at closing, that loan comes with an interest rate of 7.125%. 

#3: Get at least three personalized quotes

Once you pinpoint a few lenders that you like, it’s time to get an actual quote from them. While most mortgage institutions offer their interest rates online, they aren’t necessarily reflective of the rate you’ll get. That’s because lenders personalize rates based on your credit score, the house you’re buying, the size of your down payment, and more. 

Long story short, the best way to know what you’ll actually need to pay in interest is to get a personalized rate quote. Do this from at least three lenders. The CFPB reports that doing so can save you $100 a month or more. 

Fortunately, getting rate quotes shouldn’t be a big lift. A lot of lenders will tailor a rate quote to you if you fill out a simple online form. 

Usually, those rate quote workflows require you to hand over some personal contact information. Once you do, a loan officer should reach out. Talking with that mortgage pro can give you an even better idea of what to expect rate-wise — and what working with that lender could be like. 

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We hope this guide from our team at BankingBridge helps you find your dream house at your dream mortgage interest rate!

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