The difference between a 6% and 6.75% mortgage rate on a $400K loan is $186/month — $2,232/year — $66,960 over 30 years. Shopping for the best rate is one of the most valuable things a Tampa Bay homebuyer can do. Here is how to get the lowest rate possible.
How Many Lenders Should You Compare?
At least three. Get quotes from a big bank (Wells Fargo, Chase), a mortgage broker, and a local lender or credit union. Rate quotes from the same day are comparable — rates change daily, so comparing Tuesday's quote from one lender to Thursday's from another is meaningless. CFPB research shows that borrowers who get 3+ quotes save an average of $1,500 over the life of the loan on origination costs alone.
What Factors Affect Your Rate?
Credit score: 740+ gets the best rates. 680-739 adds 0.25-0.5%. Below 680 adds 0.5-1%+ and limits your loan options. Down payment: 20%+ avoids PMI and qualifies for slightly better rates. 10-19% is solid. 3.5% (FHA minimum) gets higher rates. Loan type: Conventional typically offers the best rates for buyers with good credit. FHA rates are competitive but include mortgage insurance (MIP) for the life of the loan. VA loans often have the lowest rates with no PMI. Loan term: 15-year loans are 0.5-0.75% lower than 30-year.
Should You Buy Points to Lower Your Rate?
Paying 1 discount point (1% of loan amount = $3,500 on a $350K loan) typically lowers your rate by 0.25%. The break-even is roughly 5 years. If you plan to stay in the home 7+ years, buying points usually makes financial sense. If you might sell or refinance within 5 years, skip the points. Some builders offer to pay points as an incentive — that is free money, always take it.
What About Builder Preferred Lenders?
Builders like Lennar, D.R. Horton, and Taylor Morrison offer incentives that require using their affiliated mortgage company. The incentive (rate buydown, closing cost credit, upgrades) can be worth $10K-$30K. But the preferred lender's rate and fees might be higher than what you could get elsewhere. Always compare: get a quote from the builder's lender AND an outside lender. Calculate total cost over 5 and 10 years. Sometimes the builder incentive wins. Sometimes outside financing is cheaper even without the incentive. Barrett helps buyers run this math — call (813) 750-0926.
Questions about the Tampa Bay market? Barrett Henry, REALTOR® and Broker Associate at REMAX Collective, brings 23+ years of real estate experience to every transaction. Call (813) 750-0926 or email barrett@nowtb.com.