Smart Mortgage Shopping - 3 Steps to Take by:Grant Eckert
Most people wouldn't just purchase the first car they look at, so why would shopping for a mortgage be any different? New would-be homeowners are looking for ways to simply just secure financing that they forget that they are the ones in control of their terms. To help you get the best mortgage deal for your current financial situation and for your future, here are three steps you will want to take.
Before you can take advantage of any of these steps, it will help if you to gain a basic understanding of the mortgage process and terms you might run across as you begin your search. There are a number of helpful books and websites you might want to look into that can help you begin to find your footing in this maze of mortgage-speak.
First of all, you need to look at the lending information from several different lenders. You have a number of options for borrowing money - credit unions, banks, thrift institutions, and mortgage companies. So, with those places in mind, you will want to start asking around for the amount of money that you will want to borrow to see what offers you might get. And while a mortgage broker can do this footwork for you, they will need to be paid for their services, which may not be something you want to pay. However, their services are worth it due to their experience and how many lenders they can access.
The next step in finding a mortgage is to start asking these lending institutions what kinds of terms they can offer you. The most important term that you will come across is the rate of interest. When you are purchasing a home, you will be paying not only money for the house itself, but also for the borrowing of the money - interest. This allows the lender to make money from your transaction as most interest is calculated over the time period and the amount of the loan. Thus, the longer and bigger the loan, the more money they will make. But since you're interested in paying for a home and not the bank, you will want to start looking for the lowest rates you can.
You will find that rates are divided into fixed and adjustable. You will want to make sure that the lenders are up front about how current their latest posted rates are. Note that fixed rates mean that your mortgage payments will not change, while adjustable rates will make your monthly payment vary. In addition to the interest rate, you will want to get a thorough explanation of the points and the APR associated with the lender to get a comprehensive idea of what a loan from them will entail.
The third step in shopping for a mortgage is often the most intimidating for the borrower and that's negotiation. You have a right to negotiate for the terms that you want, though you might not get them. It will help as you are looking at the various lending institutions if you begin to create an 'ideal' mortgage plan in your head. That way, you can talk to other lenders about what other institutions have offered you so that they can match that price or reduce their rates to attract your business.
You are in the driver's seat when it comes to your mortgage, so be sure to speak up when you think something is too high or ask for an explanation of every number that you see. If you're not happy, you can always look elsewhere for a lender.
About the author
Grant Eckert is a writer for ShopRate.com. ShopRate.com is a leading provider of http://www.ShopRate.com Mortgage Quotes | Mortgage Rates