One of the biggest lifetime investments that you’d make is probably buying a house. Carrying a mortgage loan is therefore likely to be the largest debt that you’ll incur. You’re making this huge commitment for probably the next twenty to thirty years.
Therefore, it is imperative to get to know what you’re getting and the much you’ll pay in terms of interests and fees. Traditional advice holds that you shop thoroughly before settling on a particular lender. Compare the rates and other conditions for as many lenders as possible before you settle on one.
This article aims at giving you tips that would help you in comparing the offerings of different lenders and thus make an informed decision.
Consider the available mortgage types
There are varieties of mortgage loans that you can take advantage of. Your current financial standing and credit history play a vital role in determining the type and the amount that you’d qualify for. Majority of mortgage loans are conventional and these are issues and backed by private lenders. These loans can also be sponsored by federal agencies depending on the size of the loan. Government-backed loans are also available and are designed to help people with low income and the first-time homebuyers to get approved for a mortgage. Government-backed loans are laxer in their terms and conditions with low or even zero down payments and flexible requirements compared to the conventional ones. Thus depending on your income level and the much you can raise, compare the available options and go for the one that is less costly and which falls within your budget.
Focus more on APR
When you get a mortgage, you will not only pay the interest but there are other costs you must meet. Broker fees, loan origination fees, mortgage insurance fees, and other charges are included in the repayment. All these plus the interest are combined in what is called Annual cost of the loan expressed as a percentage. APR give you the exact figure of the total that you’ll be paying and the details of each cost. If you focus on interest alone, you may be misled to take a loan that is seemingly less costly only to realize that the other costs are exorbitantly high.
Some lenders may offer discount points to arrive at a lower interest rate than the competitors. An equivalent of a point is one percent of the principal amount. The more points you pay, therefore, the lower the rate. Discounts points could add up the APR and therefore, you must seek guidance from a loan comparison expert who’d guide you on the most appropriate approach.
Negotiate the best deal
As the adage goes, ‘nothing valuable comes on a silver platter’. Get quotations from as many lenders, loan comparison site as possible, and compare their rates. Ask for a breakdown of each cost and get details of whatever other charges that may accrue. Ask for discounts available, this could look minute but may add up to big amounts that would matter.
Do not settle for a lender just because of the advert you saw or because you like the salesperson. Remember, it would take you a lifetime to repay and therefore, comparing lenders and getting the best offer would save you a lot of money and give you peace of mind.