“The ‘best’ mortgage rate means the lowest rate available for a mortgage that contains all of the features and terms the client is looking for,” says Laird.
He notes that some of the key features rate shoppers should consider include the penalty to break your mortgage; pre-payment privileges (i.e., the lump sum payments and percentage increase to your monthly payments that are permitted each year); whether it comes with a Home Equity Line of Credit (HELOC); and the rate hold period.
Laird adds that quality of service from the lender should also be on consumers’ radar when rate shopping.
“Does the lender have a reputation for offering good service? Even if a mortgage has a feature that a customer wants, they will often need to work with someone from the lender to execute said feature,” he said, such as porting a mortgage from one property to another or doing a “blend and extend.”
For McLister, the “best” mortgage rate is one with “the highest probability of maximizing your net worth. That means choosing the optimal combination of interest rate savings, term length, rate type, origination fees, post-closing fees, advice and flexibility,” he said.
As for the key features rate shoppers should take into consideration, McLister adds, “Depending on one’s circumstances, a borrower might need to overweight factors like payment flexibility, refinance options, porting rules, prepayment allowances, readvanceability, prepayment charges and so on.”
