How to use internet to find the best mortgage rate?

You must use it carefully. But there are some places to start. One of the best-known Web sites for interest rates in general and specifically for mortgages is BankRate Monitor, found at www.bankrate.com. BankRateMonitor both surveys area lenders for mortgage rates while at the same time providing a venue for mortgage companies—brokers as well as bankers—to advertise on the same page.

The mortgage section lets you select which major city and state your property is located in, whether you want a conforming or jumbo quote, and breaks down fixed and adjustable rate mortgages. If you live in San Diego, you would fill in your city and state, click on your mortgage requirements and, voila, lists upon lists of mortgage rate quotes. On these rate quotes you’ll see loan parameters, such as the rate, the APR, how long the rate is good for, when the rate was posted, plus any other comments lenders may add, such as, ‘‘We specialize in loans for hamster farmers!’’


One thing you’ll notice is that there are a great many lenders who advertise on the Internet, and you’ve probably never heard of most of them. Is that a bad thing? Of course not, but you do need to scrutinize these people with a tad more diligence than lenders who were referred to you by your agent or by your friends. Is Big Shot Mortgage offering an interest rate of 4.00 percent while everyone else is offering 7.00 percent? Do you think Big Shot Mortgage has a special edge on the mortgage market? Of course they don’t. But there are some ways to help qualify those companies you see advertising on the Internet.

First, visit their Web site. Easy enough, right? But you’re not looking for key terms such as ‘‘we offer great rates’’ and ‘‘we offer great service’’ or any other such patter. Instead, compare the interest rates quotes on their Web site with the ones that are advertised on the Internet. Do they match up? If they do, are they for the same date?

You can’t compare interest rates unless they’re for the same date, and even then the markets may have changed. If you get interest rates that are much different on the company’s Web site than you see advertised in other places, take their advertisement with a grain of salt.

Another thing to determine from their Web site is to see if they’re in compliance with Federal Truth in Lending laws by quoting interest rates in the correct and legal manner. If you see a rate quote, do you also see the corresponding APR quote? Do you see the loan amount used for the quote? If you see a lender or broker quoting interest rates on their Web site without complying with federal statute regarding rate quotes, you might think of moving on.

Are they operating legally in your state? Most states have licensing laws for lenders and brokers. If someone is advertising in your state, are they doing so legally? A broker’s Web site usually lists the states where they’re authorized to do business. If you find no such list or nothing about their licensing, don’t consider this lender or broker. I know this sounds a little tough, and quite frankly there are probably some very good lenders and brokers out there who might get dropped from your list because they didn’t advertise properly or disclosed their licensing authority. But think about that for a moment if you are tempted to apply with someone you’ve never heard of just because they advertise a great rate while at the same time they’re in flagrant violation of Federal Truth in Lending Laws. Do you really want to take that chance?