As an avid real estate investor, I follow the market closely. Something interesting I observed when mortgage interest rates plummetted to all-time lows in 2020, was that not every mortgage lender offered the cheapest rates. The cheapest mortgage lender has the capacity to refinance. But, not all of them did due to massive demand. Therefore, the cheapest mortgage lenders kept rates artificially up to stem the demand.
After exhaustive research, I believe the best way to find the cheapest mortgage lender is by using an online mortgage marketplace. Platforms such as LendingTree aggregate quotes from prequalified lenders who want to compete for your business. You can get competitive, real quotes in under three minutes for free. Take advantage of their easy to use online marketplace with no obligations.
The only issue with LendingTree is that they are very aggressive in following up for the next 3-5 days after applying.
However, they revolutionized the way consumers get a mortgage over 22 years ago. In the past, consumers had to pitch banks to get a mortgage or refinance their loan. Today, thanks to LendingTree's innovation, banks now pitch you to win their business. After all, when banks compete, you win.
The larger your mortgage lending market place, the cheaper your interest rate and borrowing fees. When looking for the cheapest mortgage lenders, look for longevity, a proven track record, healthy balance sheet, and high customer ratings.
Cheapest Mortgage Lenders
The cheapest mortgage lenders have these things in common:
- Well capitalized
- Good history
- Competitive rates
- Strong marktplace
Free Quotes, No Obligation
The great thing about online lending marketplaces is that you can apply for a no obligation loan online in minutes, and within the hour, you'll get competing banks e-mailing and calling you about their best rates.
You, the borrower don't have to pay the platform a penny. It's the banks who pay them to compete for your business. As a result, lenders are motivated to try and get you the best loan possible to win your business.
Just be prepared that they will contact you quickly. But the e-mails and phone calls calm down after a few days once they realize you've moved on.
I like to get online quotes in writing and then bring them to my main bank to negotiate. Using this strategy, I was able to get my bank to refinance my jumbo loan to a 2.375% interest rate from their initial 2.5% offer.
Why You Should Refinance Now
Mortgage rates rose between 2021-2023 but are finally coming back down again in 2024.
If you are looking to purchase a home or want to refinance, shop around. Try to get a lot of quotes to help you get the best mortgage rate and terms as possible.
A big part about growing your net worth is doing everything possible to minimize expenses. I believe everybody should at least own their primary residence to get neutral the ever rising property market. Once you own, it's all about lowering your property taxes and getting the best mortgage rate possible.
Look for abnormalities in mortgage rates for great opportunities, albeit rare. Here's an example of when the yield curve was inverted.
Take Advantage Of Lower Rates
When it comes to getting a mortgage rate and refinancing, your goal is to save money by locking in a new low rate. I've refinanced three different properties over the past 13 years multiple times, and my combined interest savings a month is roughly $4,000. That adds up to well over $1,000,000 in interest savings over the life of the loans!
If you can find a home that's a good deal, you can afford the payments, and plan to stay there for 10+ years, then I would take advantage of record low interest rates and buy property.
Invest In Real Estate For As Little As $10
In addition, it's a great time to invest in real estate and diversify your portfolio. You can invest in real estate without taking on a mortgage by investing in private real estate funds.
Take a look at Fundrise, a leading private real estate investment firm, manages over $3.5 billion in assets with a minimum investment of just $10. It focuses on residential and industrial real estate in the Sunbelt region, known for its lower valuations and higher yields.
About the Author: Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $200,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
About Financial Samurai: FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1.5 million organic pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.
Fundrise is a sponsor of Financial Samurai and Financial Samurai is an investor in Fundrise.