Home Loans and Mortgages - Shop Around for the Best Deal
Written by: Charles Essmeier
The real estate market has been booming in the U.S. for some five years now and a record number of Americans now own their homes. The mortgage industry has recognized the fact that people have all kinds of needs and incomes and has provided an impressive array of different types of loans. In short, there is a loan for most everyone. If you're looking to buy a home, it's comforting to know that there is probably a mortgage that will suit your needs. Before you run right out and sign a mortgage document, be aware that rates and fees can vary dramatically from lender to lender. It pays to shop around before you buy.
Money, in the form of a loan, is a commodity, just like anything else you would buy. There are a number of different people who can offer you this money, and the terms and prices can, and will, vary dramatically. The smartest thing you can do prior to buying a home is to spend a few days talking to different types of lenders to see if you can find the best deal.
Here are a few things you should consider:
Lenders come in different types - You can borrow from a bank, a mortgage company, or a savings and loan. Some insurance companies offer mortgages through affiliated lending institutions. Each institution will have different types of loans and terms, so it pays to talk to all of them.
Interest rates can vary - The interest rate charged by each lender will vary from day to day, but one lender may offer more competitive rates than another, so be sure to ask about rates.
Points and fees - A lot of the profits an institution earns from a loan comes in the form of points and fees added to the loan. A "point" is one percent of the loan amount, and these often amount to extra profit for the lender. Compare interest rates and points when shopping around. Lower is better. And watch out for fees. A common fee added to loans these days is an early payment penalty. Watch out for that one, or you could pay a lot of extra money should you decide to refinance later.
It's worth remembering that fees and points are often negotiable, so don't be afraid to ask for a better deal. Let the lender know that you are shopping around; it may help them become more cooperative. The lending business is a competitive one, and most lenders are eager to get your business. The time you spend shopping for a loan may save you thousands of dollars over the life of your loan. It's worth the effort. About the Author