Finance and Credit Professional

There are several things to look at when comparing offers for home loans from different lenders. You are not just comparing interest rates. It is far more involved than that. Consider the following factors that can affect how much you pay on a home loan.

Interest Rates. One of the first things you should look at when comparing mortgage offers is the interest rate. Generally, the lower the interest rate, the better for you and your expenses. Even a slight difference in interest rates can mean a lot of money over the life of a loan. Make sure you understand if the rate offered includes discount points, which is money you pay up front to lower your interest rate.

But the interest rate isn't the only rate to look for. Another good benchmark for comparing offers is their annual percentage rate (APR). This figure combines the interest costs and other fees charged by a lender over the life of the loan, and expresses them as a yearly percentage. Make sure to ask for an itemized list of what's included in each APR calculation, so you know you're making a fair comparison, as some lenders don't include all of their fees in the calculation.

Pre-approval. This is the best way to shop around for a home loan. Contact several lenders to get pre-approved. You provide your basic financial information -- income, assets, debt -- and the lender estimates how much of a loan they can provide to you. Because this is not a formal loan application, you can get pre-approved with several lenders and compare the home loan products they offer.

Fees. Interest rates may not vary that much between lenders, but fees do. When shopping for a home loan, get a written estimate of all the fees you are expected to pay from every lender you are considering. Question any fees that you do not understand. Upon being questioned, some lenders may even waive the fees for you.

Different products. Home loans come in many shapes and forms. You can get a fixed-rate mortgage for 15, 30, 40, or even 50 years, you can get an Adjustable Rate Mortgage (ARM), or you can get a hybrid ARM that is fixed for a set period and then has an interest rate that adjusts. Compare the different home loan products that lenders are able to offer.

Your circumstances. Certain lenders specialize in specific customers. If you have bad credit or a small down payment, just any lender may not work for you. Instead, shop around and find a lender that specializes in your situation for home loans.

Customer service. You'll also want to consider customer service. Look for a lender who is quick to return calls and responsive to your questions.

Other details matter too: Do the lock in terms vary? Is there a pre-payment penalty? What are all the closing costs and fees? Ask for a read a Good Faith Estimate (GFE) for each loan, and ask questions if something doesn't make sense.

About The Author :

Chris Navi - I want everyone to be well informed in regards to their mortgage, home buying and property buying situations. My website http://fundinglist.com/guide-to-mortgages/index.php will give you details on each of the steps mentioned in my article.

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