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Compare Home Loans
Comparative shopping
for a home loan or mortgage helps you get the best financing deals
around. Just like when you buy a car, the price and terms on a mortgage
are negotiable. Unless you want to pay sticker price and put needless
money into your lender's pocket, it's essential to compare all of the
costs associated with any home loan. You can save thousands of dollars
by shopping, comparing and negotiating.
Home loans are
available from several types of lenders:
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Thrift
institutions
-
Commercial banks
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Mortgage
companies
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Credit unions
Different lenders may
quote you different prices, so you should contact several to make sure
you're getting the best price. Through our site you can submit one
application and get up to 5 home loan quotes in minutes. You can then
sit back and compare quotes to figure out which lender gives you the
best deal. This service is totally free. We get paid for giving the
companies an opportunity to compete for your business.
Lenders Vs. Brokers
Which is which and why should you care? Some financial institutions
operate as both lenders and brokers. Brokers are usually paid a fee for
their services that may be separate from and in addition to the lender's
origination or other fees. So you'll pay twice. A broker's compensation
may be in the form of "points" paid at closing or as an add-on to your
interest rate, or both. You should ask each broker you work with how he
or she will be compensated so that you can compare the different fees.
Be prepared to negotiate with the brokers as well as the lenders.
Learn All You Can About Cost
Know how much of a down payment you can afford, and find out all the
costs involved in the loan. Knowing just the the monthly payment or the
interest rate is not enough. Ask for information about the same loan
amount, loan term, and type of loan so that you can compare the
information. Get this information from each lender and broker:
Rates
Ask each lender and broker for a list of its current mortgage interest
rates and whether the rates being quoted are the lowest for that day or
week.
Ask whether the rate is fixed or adjustable. Keep in mind that when
interest rates for adjustable-rate loans go up, generally so does the
monthly payment.
If the rate quoted is for an adjustable-rate loan, ask how your rate and
loan payment will vary, including whether your loan payment will be
reduced when rates go down.
Ask about the loan's annual percentage rate (APR). The APR takes into
account not only the interest rate but also points, broker fees, and
certain other credit charges that you may be required to pay, expressed
as a yearly rate.
Points
Points are fees paid
to the lender or broker for the loan and are often linked to the
interest rate; usually the more points you pay, the lower the rate.
Check your local newspaper for information about rates and points
currently being offered.
Ask for points to be quoted to you as a dollar amount rather than just
as the number of points so that you will actually know how much you will
have to pay.
Fees
A home loan involves
many fees. Every lender or broker should be able to give you an estimate
of its fees. Many of them are negotiable. Some fees are paid when you
apply for a loan (such as application and appraisal fees), and others
are paid at closing.
In some cases, you
can borrow the money needed to pay these fees, but doing so will
increase your loan amount and total costs. "No cost" loans are sometimes
available, but they usually involve higher rates. Remember when you put
a contract on any house, you'll have to put "earnest money" down - which
is typically a small percentage of the property price.
Don't Forget To:
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