To get a reliable purchase quote,
be prepared to frame your question properly.
You can save yourself hassle and confusion – and possibly a great deal of money – by learning to ask the right question that will get you a reliable, comparable rate quote.
Example of the right question:
“I want a rate quote. The purchase price will be $800,000 with 20% down. The property is a single-family house and it will be my primary residence; my middle credit score is 714. What interest rate can I lock in for 30 days on a 30-year fixed rate mortgage, with a loan amount $640,000. As per the good faith estimate, I want to know your origination charge and the cost or credit for this rate. I want to keep the cost or credit for the rate close to zero.”
Using the Shopping Toolkit worksheets will assure you receive an accurate rate quote. If you ask for a quote without clearly laying out your specific situation, you will probably get a generic quote that reflects the most optimistic possible assumptions – which may or may not apply to you. Loan pricing depends on numerous parameters, and many impact loan pricing.
Below is a list of the information you will need to formulate your question. The Borrower Information worksheet in the Shopping Toolkit will help aggregate this information.
- Purchase price and percentage down payment:
If you are in contract or are about to be, use the price and down payment in your contract. If you have been preapproved but haven’t yet found a property, use the loan amount and down payment for which you were preapproved.
- Property type and use:
- single family
- 2,3 or 4 unit
- primary residence
- second home
Important note: Be sure to mention any unique property considerations, for example: geodesic dome, leased land, manufactured or modular housing, low owner-occupancy in a condo, unpermitted additions, remodel in progress, flood zone.
- Credit score:
You will need three credit scores from a tri-merge mortgage credit report. The lender will use the middle score to price the loan. If there are two borrowers, the lender will use the lower of the two middle scores.
- Rate lock:
30 or 45 day locks are the most common. When you are purchasing, your rate lock will be determined by your close of escrow; remember that the lock term must extend to, or past, the date of the close.
- Loan type:
Review all your loan options and settle on the one that is best for your situation. Loan type affects the rate and thus can also affect how much you qualify for in a purchase. Type of loan: fixed or ARM; if fixed, 30 year or 15 year; if ARM initial rate fixed for 3, 5, 7, or 10 years.
- Loan amount:
It’s important to know the major cutoffs between conforming loans, high-balance conforming loans, and jumbo loans. Conforming loan limits can be found here.
- Loan pricing – charge or credit:
You can pay one or more points to lower the rate; pay no points; or get a credit back to cover some or all of the closing costs. Each lender you contact should be able to provide you with pricing options. Review the loan pricing page.
When you provide the above information to a lender, the quote you get will be clear, accurate, and comparable.