Anytime you make a big purchase, you start by shopping around first. This is true whether you’re shopping for groceries or buying yourself a new car. Nowhere is comparison shopping more important than when you’re shopping for a house. After all, the decision you make today could easily still be affecting you years, or even decades, down the road.

There are many factors you’ll have to consider too. Just as housing prices can vary widely across the country, so too can mortgage rates. The mortgage rates in Washington State are considered fairer than many other states in the USA, but that doesn’t mean you shouldn’t be extremely choosy when taking out a home loan.

Here are our top five tips for comparing mortgage interest rates in Washington State:

1. Consider the Term of the Loan

Mortgages come with a variety of terms, or repayment periods. The most common are 30 and 15 years, but you might find 20-, 10-, or even 40-year options. As a general rule, as the loan term increases, so does the interest rate on the loan as it relates to the amount of risk for the lender. A longer loan term means more time and potential for the borrower to default on the loan, making it riskier to lend them money. Lenders mitigate this risk with higher interest rates.

Keep in mind that a shorter term will result in a higher monthly payment, as the loan amount will need to be repaid in fewer years. If you can manage higher payments, you’ll benefit by paying less interest overall and likely receiving a lower interest rate.

2. Compare Fix-Rate and Adjustable-Rate Mortgage Options

When you secure your home loan, you need to decide if a fixed or adjustable rate is right for you. With a fixed-rate loan, the interest rate stays consistent throughout the life of the loan. The interest rate of an adjustable-rate mortgage, or ARM, will start out as a base interest rate but then adjust accordingly with changes in the economy.

Typically, the starting interest rate of an ARM will be less than the fixed rate offered for the same amount. There is some risk since it could go higher than you can afford when the interest rate begins to adjust. If  you plan to own the home for only a few years before selling and moving on, opting for an ARM could save you money on interest.

3. Decide Whether Conventional or Government-Backed Is Right for You

Different lending institutions will make different mortgage offers, but you need to consider your own needs before making any decisions. There are many different paths you can take when it comes to opening a mortgage.

Most commonly, buyers choose conventional loans, which are simply loans made by private lending institutions. These can be credit unions, banks, or online mortgage companies. They differ from other types of mortgages because they are not insured by the government, which has several advantages as well as disadvantages.

Conventional loans almost always offer better mortgage rates, provided you make your payments in a timely manner and pay the loan down over time. However, because they are not backed by any type of government insurance, lending institutions are stricter about who qualifies.

Government-backed home loans have specific requirements to qualify, including income, location, how you plan to use the home, and so forth. The most common government-backed loans are FHA loans, VA loans, and USDA loans. These types of loans are better suited for low- or middle-income buyers because they are easier to qualify for, but when it comes to comparing interest rates, they tend to be on the higher side because you must also pay for private mortgage insurance, or PMI.

4. Always Be On the Lookout for Deals

Choosing the right mortgage rate might be the biggest financial decision of your life, so you should be on the lookout for the best deals you can find. You also need to think outside the box when comparison shopping for mortgage rates.

Banks are probably the first lenders to come to mind when you need a mortgage, but they aren’t your only option. You may be able to discover better offers from online websites or mortgage brokers, for instance. Credit unions especially tend to offer lower interest rates and other benefits, such as lower closing costs and reduced PMI.

5. The Internet Is Your Friend

Finding the best mortgage rate is often a matter of taking advantage of the technology at your fingertips. The internet is your friend when it comes to shopping around because, with a few clicks, you can discover as many rates as you might like and also vet the potential lending institutions you’re considering. You can also compare rates using online mortgage calculators, which can give you a good idea of what to expect when you are shopping for the best rates.

The mortgage interest rates in Washington State are better than in many other states, but you should also consider other factors that affect your final costs, as there are other fees besides interest rates. A loan with very high closing costs may offset any savings you have from a lower interest rate, so be prepared to look at those as well.

6. Get a Pre-Approval Letter

Another way that you can negotiate for lower rates is by first getting pre-approval letters from multiple lenders. Pre-approval lets you know ahead of time how much you can borrow based on your current financial situation, and you’ll receive an estimate of the monthly payment amount and your potential interest rate. You can then compare these rates between lenders.

Having as much information as possible is essential when you are shopping around for a home, so a pre-approval letter can provide you with that all-important info, allowing you to compare offers and find the best loan option for you.

Getting a pre-approval letter requires consulting with a trusted financial institution that has a dedicated program in place, such as Solarity Credit Union. They can help you consider all of your options when it comes to taking out a loan so that you can make the choice that makes the most financial sense for you.