Comparing Mortgage Rate
One of the most common bases of choosing the best mortgage deals by the best mortgage provider is the mortgage rate
. In many cases lower mortgage rates are preferred over higher mortgage rates. However, low mortgage rates do not necessarily mean you will be paying less every month or throughout the entire life of your loan. So making a decision based solely on a low
mortgage rate may not be the smarter way to do things. There are other approaches in getting yourself the best mortgage rates without having to compromise on other aspects of a mortgage loan such as the loan term, flexibility of the payment schedules as well as the fluctuation of the interest rate should you opt for the adjustable rate mortgage. Some of the alternative approaches are as follows:
i) Obtaining your own credit scores
You might want to check your own credit report to ensure that your credit score is well above the minimum score in order to be eligible for a lower
home mortgage rate. If your credit score is low or generally below 600 you might be viewed as a high-risk debtor by your creditors. So it is advisable that you check your credit report and immediately correct any errors made in the report. If your score is well above 600 you probably do not have to worry about being charged a higher interest rate. However if you score is below 600 you might have to prepare yourself to make bigger monthly payments due to the higher interest rates.
ii) Comparing various lenders
Nowadays mortgages can be obtained from various institutions such as banks, mortgage companies and credit unions. Different institutions offer different deals as well as different interest rates. It probably would do you no harm at all should you feel the need to compare the interest rates of every available and reputable lender you know. It is advisable that you shop around to secure a lower interest rate.
iii) Inquiring about purchasing points
Sometimes when you walk into the office of a mortgage lender company, you would probably notice a banner that would advertise a very low introductory interest rate. The small number on the poster may seem very inviting as you probably think that the lower the interest rate is the less you would have to pay every month. This is why it is recommended for you to ask your potential lenders about purchasing points. Basically you will be buying the points from your creditor to secure the lower interest rate. The price of the points are not initially included in the introductory interest rate but will be calculated separately as a certain percentage of the principal amount of your loan. So getting the
best mortgage rate might not really mean you will pay less. Sometimes it can be quite the opposite.
iv) Listing all mortgage fees
Mortgage fees are not usually included in the introductory interest rate. Many times mortgage providers may not reveal all the mortgage fees and charges unless you specifically ask for them. Fees such as loan origination, appraisal, settlements and broker fees are just a few examples of the extra charges that you might have to pay for. Different institutions charge different kinds of fees so it might be a good idea for you to request your creditors to give you a list of all fees and charges in writing.
Getting the best interest rate to suit your lifestyle and financial capabilities might not be easy but considering the benefit of making an informed decision as well as being able to save more money in the long run might make up for all the initial hassle you would have to go through.
by: Ask Bill
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