Two factors determine the best California mortgage rates; the actual interest rate the mortgage loan is based on and the fees associated with obtaining the new mortgage. To obtain the best mortgage rate in California you’ll need excellent credit, a large down payment, and plenty of income to cover your expenses.
Owning a home is one of the most important investments you can make. Use the information and tools below to help you find the best California mortgage rates for your next refinance or purchase transaction.
How Do I Get The Best California Mortgage Rates?
It’s not as hard as you think.
The two steps below will only take 10 – 15 minutes to complete, and they will help ensure you get the best mortgage rate possible. We also provide answers to some important questions, three mortgage rate charts, and tips for getting the best mortgage rate. If you have any questions please don’t hesitate to ask.
The First Step Is To Use The Internet
Websites like Zillow, the Business Consumers Alliance, and Yelp can be helpful when trying to determine which mortgage companies you should request quotes from.
However, I do believe those sites are secondary, and the best place is the Better Business Bureau.
The reason is simple. The Better Business Bureau requires members (those that are Accredited) to hold certain standards of excellence, and they screen all the reviews submitted.
Second Step – Only Work With Top Rated Companies
The second step to getting the best California mortgage rates is only to work with mortgage companies that have a top rating with the Better Business Bureau (A or A+ rating) and companies that are “Accredited”.
Working with a top-rated mortgage broker (or lender) ensures you’re in good hands when it comes to closing your loan. Avoid mortgage companies that have a low rating and companies that are high pressure.
Third Step – Find An Experienced Loan Officer
Make sure the Loan Officer has at least five years of experience and is willing to take the time to answer any questions you have. If the Loan Officer is slow getting back to you and/or doesn’t answer your questions directly you might want to find a new loan officer to work with.
Shopping for the best California mortgage rates is risky when you chose to work with a Loan Officer that has little to no experience.
Once you’ve located 2-3 mortgage brokers; then request a rate quote. Make sure each mortgage broker you’re working with has the exact same information so that you can compare apples to apples.
For example; if you tell one company that you don’t need any cash out (thus not a cash-out mortgage loan) but then tell another company that you wouldn’t mind $10,000 in cash for some upgrades to the home, then you are NOT comparing the same loans/rates.
That is because one is with no cash-out, and one is with a small amount of cash-out (and cash-out loans usually come with a slightly higher rate and/or fees).
So make sure that each mortgage company has the exact same details (loan amount, house value, income, credit, etc.). This way, when you receive your quote; you’ll be comparing apples to apples, and it will give you a greater opportunity to find the best California mortgage rates.
Ask For The Total Fees
One more thing; when comparing loans, compare the rate and TOTAL fees (if any) you’ll be paying. When you get the quote, confirm that the fee amount quoted is for everything in total; with not a single penny being left out.
The reason is that some loan officers just quote lender underwriting fees, and leave out points and or 3rd party fees. To obtain up-to-date information on current market conditions and interest rates, be sure to visit our current mortgage rate updates. So make sure you ask; is this the total for all the fees being charged?
Fourth Step-Rate Lock In Writing
Here is something else you can to do make sure you obtain the best mortgage rate possible; when you move forward with a mortgage company, get your rate locked in writing! Did you know some mortgage companies will not allow you to lock in your mortgage rate until just before closing?
Others require you to lock upon application which means you have no options to see if market conditions improve. Never assume your mortgage rate is locked in; always request written confirmation.
If your Loan Estimate does not say the loan is locked in the top right corner of the first page, then your rate is not locked.
The Most Popular Mortgage Loan Programs
There are many different mortgage loan programs, and the most popular loan program is a fixed-rate mortgage (Conventional, FHA, and Jumbo mortgage loans). Here we review the two main types of mortgage loan programs, fixed-rate mortgages, and adjustable-rate mortgages, along with various types of loans.
What Is A Fixed Rate Mortgage?
A fixed-rate mortgage is a mortgage that has an interest rate that never changes. From the first payment to the last payment, your interest rate is the same no matter what the market does.
The benefit of a fixed-rate mortgage is stability and certainty since your interest rate and your monthly payment never change.
What Is An Adjustable Rate Mortgage?
An adjustable-rate mortgage (AKA ARM’s) is a mortgage that has a short-term fixed period, and after that short-term fixed period, the interest rate adjusts. Also; when your interest rate adjusts, your payment can adjust as well. Usually, the fixed rate period is five, seven, or ten years, and most adjustable rate mortgages are based on a 30-year term. The benefit of an adjustable-rate mortgage is that you sometimes obtain a lower rate and payment when compared to a 30-year fixed-rate mortgage.
What Is A Conventional Mortgage?
A Conventional loan is any mortgage that the Federal government does not guarantee. Mortgage loans guaranteed by the Federal government include FHA mortgage loans and VA mortgage loans.
The best mortgage rates in California are usually Conventional loans (not always).
What Is A Conforming Mortgage Loan?
A Conforming mortgage loan is any mortgage that follows (“conforms”) the underwriting guidelines of Fannie Mae and Freddie Mac. A Conforming loan is also a Conventional loan, but not all Conventional loans are Confirming loans (see Jumbos).
Fannie Mae and Freddie Mac do not provide mortgage loans directly to consumers. Mortgage lenders provide Conforming mortgage loans to consumers.
What Is A FHA Mortgage?
An FHA mortgage is a government-backed mortgage program designed to help people with less-than-perfect credit and those who have limited down payment funds to buy a home.
FHA stands for Federal Housing Administration.
The government does not make the loan directly to consumers. Mortgage lenders loan the money directly to consumers and underwrite the loan under the FHA guidelines. Provided the mortgage lender underwrote the mortgage based on FHA requirements, the Federal Housing Administration will then protect mortgage lenders in the event of defaults on the mortgage.
What Is A VA Mortgage Loan?
A VA mortgage loan is designed to help those that have served in the military buy homes. The VA mortgage loan program offers several unique options, such as a zero-down purchase program. The VA does not lend money directly to consumers; mortgage lenders do. Provided the loan is underwritten to VA mortgage guidelines, the VA will protect the lender if the borrower defaults on the mortgage.
What Is A Jumbo Mortgage?
A Jumbo mortgage is a mortgage that has a loan amount above the conforming loan limits.
Fixed Mortgage Rate Charts
Below is a 30-year fixed mortgage rate chart along with a 20-year and a 15-year fixed-rate chart.
Two important things to remember when reviewing the charts:
- This is just an example and for informational purposes only.
- This is not a quote nor an offer to lend.
Best 30-Year Fixed Mortgage Rate Chart
Here is a 30-year fixed mortgage rate chart with loan amount and payment information:
|Mortgage Rate:||Loan Amount:||Payment:|
Best 20-Year Fixed Mortgage Rate Chart
Here is a 20-year fixed mortgage rate chart with loan amount and payment information:
|Mortgage Rate:||Loan Amount:||Payment:|
Best 15-Year Fixed Mortgage Rate Chart
Here is a 15-year fixed mortgage rate chart with loan amount and payment information:
|Mortgage Rate:||Loan Amount:||Payment:|
Best Mortgage Rate FAQs
Below we cover some best mortgage rates and frequently asked questions. If you have additional questions about how to get the best mortgage rate in California please don’t hesitate to ask!
What Is The Best Mortgage Rate For Me?
The best mortgage rate for someone else may not be the best mortgage rate for you. Let’s say your neighbor is in the process of refinancing and locked in a 30-year fixed rate at 3.50% with one point. And let’s say your neighbor just retired and has no plans on moving for the next ten to twenty years.
You call the same mortgage broker and are also offered the same rate options. The only difference between you and your neighbor is that you will be moving in the next five years. The Loan Officer says you can do the 30-year fixed rate at 3.5% with one point, or you can do a 30-year fixed rate at 3.75% with zero points and a small lender credit toward third-party fees.
Since you will be moving in the next five years, the lower-cost mortgage rate is a better option for you.
When deciding on what the best mortgage rate is, you want to have a clear picture of how long you plan on staying in the home and how long you plan on keeping the mortgage.
What Are Closing Costs?
Closing costs are expenses associated with doing a mortgage. Expenses associated with doing a mortgage include underwriting, appraisal, title, escrow, and recording. There are other costs that might be involved (like points or HOA certification fees), but these are the basics.
On refinances, closing costs can usually be rolled into the loan however, on purchase transactions, they need to be paid at closing (by either you or the seller). Sometimes you’ll receive a mortgage lender credit that will help cover some or all of the closing costs being charged.
Do I have To Set Up An Impound Account?
An impound account is not required unless you have an FHA mortgage loan or if you have less than 20% down on a Conventional loan you’ll be required to set up an impound account.
What is an impound account?
An impound account is commonly referred to as “escrows”. The mortgage lender sets up this account to pay your property taxes and your property insurance when those bills are due. If you have an impound account then your annual amount for property taxes and property insurance will be divided by 12 (for 12 months), and that amount will be added to your mortgage payment each month.
- Annual property taxes are $4,000
- Annual property insurance is $1,000
$5,000/12 = $416.67
The $416.67 will be added to your monthly mortgage payment. It’s a great feature as it allows you to spread out these bills over twelve months rather than coming up with a lump sum (when they’re due).
What Is The Time Frame For Closing A Mortgage?
The time frame for closing a mortgage is going to vary from one mortgage lender to the next. Generally speaking, most refinance and purchase transactions will close in thirty days or less. Sometimes a refinance or even a purchase can close in less than three weeks.
If you have a subordination on a refinance then your time frame is usually between thirty and forty-five days, and sometimes purchase transactions are sixty to ninety days (depending on what you and the seller agree on).
What Are The Different Types Of Mortgage Lenders?
There are three main types of mortgage companies:
- Mortgage Brokers
- Direct Lenders
- Banks and Credit Unions
Mortgage brokers work on your behalf and find the best mortgage lender for your current situation. Mortgage brokers usually have the most options, the most flexibility, and access to the best mortgage rates. Direct lenders borrow money from banks and underwrite the loans in-house. They usually don’t have the same options as a mortgage broker but still can be a good option for some homeowners. Banks and Credit Unions generally lend their own money and rarely have the options and flexibility that a mortgage broker has.
What Is Private Mortgage Insurance And Mortgage Insurance?
Private Mortgage Insurance (PMI) is an insurance policy the mortgage lender obtains from an insurance company to protect the mortgage lender from a borrower default. The borrower (you) pay the cost of the PMI on a monthly basis (it is added to your monthly mortgage payment).
Mortgage Insurance (MI) is essentially the same thing but for FHA mortgage loans. FHA does not use private insurance companies. The amount needed to cover the MI on a monthly basis is added to your mortgage payment.
FHA mortgage loans also have a “funding fee” which is charged are the time of closing. This is called Upfront MI and you should ask your Loan Officer what the current upfront amount is (which can be added to the loan or rolled into the interest rate).
Locating The Best Mortgage Rate For You
Locating the best mortgage rate for you is perhaps the most important part of the mortgage loan process. Working with a top-rated mortgage broker and an experienced Loan Officer will help you achieve your goals. Following our simple steps and asking the right questions will play a big role in securing the best mortgage rate in California.
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