Advice On Interest Rate Comparisons For Your Mortgage
When shopping for a home loan, there are several things to take into consideration. Whether the mortgage will be for a new home or a refinance, the process is pretty much the same like My Local Broker - home loan directory. The first thing to do is to research interest rates. It may seem simple at first, but after a few phone calls or internet searches, the potential buyer begins to realize that comparing lenders and mortgage rates can be challenging.
To start off, lenders will usually show two rates – the APR or annual percentage rate and the posted rate. The APR is the actual rate that the borrower will end up paying when all the costs are added in. The APR is typically a bit higher than the posted rate, so this is the rate that is important. Lenders will usually have different fees added to their loan products, so the APR is the rate that potential borrowers should be comparing as they look at potential lenders. This is the rate that will be important over time.
When shopping for mortgages, it is really important that the borrower is comparing similar information between lenders. This means comparing the same fees and rates from loan to loan.
Interest rates change daily, so they should shop for loans on the same day and compare rates that day to get an accurate comparison. Another challenge is that lenders have various costs and these may be unique to a given lender. It is important to compare all associated fees from one loan package to another and then look at the bottom line cost of the loan as compared to the interest rate. This means not only look at the costs at closing, but at the end of the loan as well.
Every lender should provide the borrower a Good Faith Estimate. This document provides the borrow information on the actual costs associated with the loan. It is an itemized listing of the fees and costs of accepting the loan. It will outline what costs can be expected at closing and the overall costs of the loan. This is the document the borrower can use to compare loans between lenders. Many time some of these costs can be negotiated, especially administrative types of costs.
Potential borrowers should also get familiar with using a mortgage calculator. These use basic information - typically the loan amount, interest rate and term of the loan - and then calculate the monthly payment. Most will also provide an amortization table demonstrating how the loan balance will change over the life of the loan. These are great for testing various loan scenarios.
Shopping for a home loan can be challenging, but using these comparison tools and methods can help simplify the task. Doing the research and legwork can result in thousands of dollars in savings for the home buyer.
To start off, lenders will usually show two rates – the APR or annual percentage rate and the posted rate. The APR is the actual rate that the borrower will end up paying when all the costs are added in. The APR is typically a bit higher than the posted rate, so this is the rate that is important. Lenders will usually have different fees added to their loan products, so the APR is the rate that potential borrowers should be comparing as they look at potential lenders. This is the rate that will be important over time.
When shopping for mortgages, it is really important that the borrower is comparing similar information between lenders. This means comparing the same fees and rates from loan to loan.
Interest rates change daily, so they should shop for loans on the same day and compare rates that day to get an accurate comparison. Another challenge is that lenders have various costs and these may be unique to a given lender. It is important to compare all associated fees from one loan package to another and then look at the bottom line cost of the loan as compared to the interest rate. This means not only look at the costs at closing, but at the end of the loan as well.
Every lender should provide the borrower a Good Faith Estimate. This document provides the borrow information on the actual costs associated with the loan. It is an itemized listing of the fees and costs of accepting the loan. It will outline what costs can be expected at closing and the overall costs of the loan. This is the document the borrower can use to compare loans between lenders. Many time some of these costs can be negotiated, especially administrative types of costs.
Potential borrowers should also get familiar with using a mortgage calculator. These use basic information - typically the loan amount, interest rate and term of the loan - and then calculate the monthly payment. Most will also provide an amortization table demonstrating how the loan balance will change over the life of the loan. These are great for testing various loan scenarios.
Shopping for a home loan can be challenging, but using these comparison tools and methods can help simplify the task. Doing the research and legwork can result in thousands of dollars in savings for the home buyer.