Comparing Mortgage Rates


The most important thing to take away from this quick article is to not hesitate in asking your lender questions. This is one of the biggest investments of your life, be sure to understand all the details. Below are a few questions you can ask your lender when receiving a mortgage rate quote. Ask these questions and you can bet you are doing yourself a favor when you are shopping around for not only for mortgage rates, but also for a honest and reputable lender.

Can you break down all the details and costs associated with this mortgage quote?

Many mortgage lenders like to advertise super low rates, often that appear to be significantly lower than everyone else. However, very few borrowers ever qualify for those rates. When you read the fine print, you'll see why. Most "too good to be true" advertised rates are for a 15-year term, refinancing only, 50% LTV or lower, no self-employment with exceptional credit. Even then, you're not guaranteed that rate. Good lenders will make sure you know the details of your quote, not try to hide them.

Every quote you see or hear is based on specific loan parameters, which include the following:

Down payment amount or LTV% (Loan to Value)

States if the loan is a purchase or refinance transaction

Length of the loan term, such as, 30 years, 15 years, or other

Rate type, such as, fixed or adjustable

Credit score, property type (single family home, townhouse, condo, etc.), along with associated closing costs

Can you clearly explain all the lender fees?

No one lends money for free. Many mortgage lenders like to say their loans are "no cost". While it's common practice and often helpful to cash-strapped borrowers to use a slightly higher rate to cover the "costs" of the loan, it's important that you know exactly what all your costs are whether you're paying upfront or over time.

Can the "low cost" mortgage lender close on time?

It can be stressful trying to coordinate the sale of your current home, packing, moving and the purchase of your new home. Not closing on time can turn the experience into a nightmare or even cost you the "dream home" you were trying to buy. The peace of mind that comes with an experienced and reliable mortgage lender is absolutely worth it.

Contributing Author: Evan Jansen

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