Ready to buy a new home or to refinance your existing home loan? Purchasing a home is a great and exciting idea. But before you settle for a mortgage with a certain company, it is important to compare mortgages so you can choose wisely. So, this guide is going to show you the value of comparing mortgage. Hopefully, in the end, you will have an idea of why you must do so before opting for any particular mortgage plan.
1. Know What Mortgage Fits You (Fixed Rate or ARM)
You can either get an adjustable-rate mortgage or fixed-rate mortgage. Both options have their pros and cons, and, therefore, to choose the best option, you have to compare them.
In the case of fixed-rate loans, you will pay a constant interest rate throughout the life of the mortgage. Whether it’s the interest rate or the principal amount you pay, the amount doesn’t change. However, note that property taxes, insurance, and other costs may change.
On the other hand, the amount you pay when it comes to adjustable-rate loans can change. Such loans start with an introductory period of one, three, five, seven, and even ten years, during which the amounts you pay as interest or principal don’t change. After that, the amounts change after certain periods.
2. Know the Size of Down Payment Needed
Different mortgages require different amounts as a down payment. Unless you are a rural borrower or a veteran, in which case you can get 100% financing where you don’t need to pay down payment, you need to compare the size of down payment required for various mortgages to choose one that you are comfortable with.
3. Know the Closing Costs
Fees charged by third parties or lenders are called closing costs. These fees do not have an impact on the loan rate (except when you pay discount points). However, they affect your pocketbook. Normally, these costs amount to approximately 3 percent of the amount you pay to buy a house. The closing costs are paid after buying the house, and they comprise appraisal fees, title insurance, processing charges, underwriting charges, and other fees. Making mortgage comparisons will help you choose an option that allows you to pay lower closing fees.
4. Pick the Best Rate
With digital mortgage platforms, it’s very easy to compare mortgage rates to pick the best rate. But while you do that, remember interest rates change, and various lenders will give promotions for particular mortgage products.
5. Choose the Best Lender
When you are comparing mortgages offered by different companies, you can tell whether a particular company has good customer service or not. Remember that the process of acquiring a mortgage loan can be very hectic, and you want a reliable contact point. If your experience difficulties when you are asking various questions in the process of comparing loans, then it means that is not a lender you should consider working with. A great customer service team will make sure documents are signed by all parties involved in an efficient and timely manner, and that approval schedules are on track.
Purchasing a new home or an additional one is a good decision. And when you choose to go in that direction, the next thing you think about is getting a mortgage. But before you settle for that mortgage a particular agent told you about, you need to compare different mortgages so you can choose well. Comparing mortgage rates and lenders will give you information on how much down payment you need to pay, types of mortgages available and their pros and cons, additional costs, and other information that is critical to you. Additional Resources: The value of consolidating and reducing your personal debt | Comparing home loans | Compare Electricity and gas Deals