Mortgage Monday: Shopping For a Mortgage, continued

Shopping for a Mortgage

Now that you have decided to go with a certain loan program, you can begin shopping interest rates among lenders. To find the best possible deal, you should do some research and compare the mortgages offered by several lenders before you commit to borrow. It isn’t always easy to compare loans because your mortgage rate is only one part of your loan. You should also compare points and other fees. There are a number of different fees involved inĀ getting a mortgage that can add thousands of dollars to the cost of your loan, and some lenders have different names for them. One might offer to waive one fee and then add another one. Comparing what different mortgage brokers and lenders are charging you to get an interest rate is often the most difficult part of mortgage shopping.

Before the final decision of which loan package and which loan broker to use, find out the terms of the loan, for instance, the presence of prepayment penalties, low or high down payment, mortgage insurance, payment schedule, lock-in period and many other features. Pick the loan and other terms that best suit your situation. For example, a prepayment penalty clause can be very important if you are planning to sell your home or refinance in the next 3-5 years, or if you expect to prepay your loan.

Once you have decided to go with a particular lender, ask them to specify the documents you will be required to provide for the approval process. Also ask whether the loan application and the lock-in fees, if any, are refundable if your application is rejected.

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