Compare Costs in Obtaining a Mortgage

(December 3, 2004) --   Prospective homebuyers need to look at several factors when scouting for a mortgage. They are urged to examine the offerings of several different lenders, carefully reviewing the costs of each loan.

Borrowers would be wise to find out if the rate is fixed or adjustable and use the annual percentage rate—which factors in the rate, points, fees, and other charges—to make comparisons. They should keep in mind that many fees are negotiable and ask for clarification on any charges that they do not understand.

Loan shoppers also must recognize that lender quotes may change daily based on how much compensation the loan officer is seeking. It additionally is important to understand that lenders usually require borrowers to carry private mortgage insurance on loans with downpayments of less than 20 percent. As such, prospective customers should take care to ask how much PMI coverage would boost their monthly payment and how long they would be required to carry the policy. After choosing a lender and a loan product, borrowers should request a written rate lock to avoid any last-minute rate hikes. Experts recommend shopping around, comparing loans, and negotiating terms even if the borrower has poor credit.

Source: North Texas e-News (12/03/04)