Comparison shop for the best mortgage loan deals
A mistake many people make when looking to apply for a mortgage loan or refinance their existing mortgage is not spending adequate time shopping around. Buying a home is a big investment. You want to be sure you’re getting the best deal possible on your mortgage loan or mortgage refi. You’ll need to compare both rates and the fees and costs involved, as well as other things. Here are some tips to help you in your hunt for the best mortgage loan.
7 Tips for Mortgage Loan Shopping
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Look for a level of trust
It’s important to find a mortgage lender you feel comfortable with and one you believe is looking out for your best interests. While you can get a mortgage loan or mortgage refinance from a bank, a mortgage broker, an online lender, or a credit union, there are big differences between these lenders. Banks, online lenders, and mortgage brokers are for-profit institutions. A credit union, on the other hand, is a nonprofit institution owned by its members. As such, a credit union returns its profits to members in the form of lower rates and fees on mortgage loans and other loans and higher rates on savings. As part of a community credit union, members will also receive more personalized service. And a more personal approach overall. Many borrowers prefer personalized attention when making such an important financial decision.
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Compare fixed-rate mortgage loans and adjustable-rate mortgage loans
Look at both fixed-rate mortgage loans and adjustable-rate mortgage loans (ARM). Fixed rates will lock you into a rate for the life of the loan. ARMs can change over time. Depending on your circumstances, one may be preferable for you.
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Compare total closing costs and fees among mortgage lenders
When you close your mortgage loan, you will find there is a list of additional fees that are charged by the mortgage lender and others involved in the closing process. You will want to include the total fees/costs (closing costs) in your mortgage rate calculation when evaluating your best option. Ask each lender for a complete list of costs when mortgage shopping. This will help you compare apples to apples and determine the true best deal.
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Consider mortgage loan term options
Look at the mortgage loan term and how it affects the interest rate of the loan. Homebuyers typically get a 15-year or 30-year mortgage loan. With a longer-term, you may have a lower monthly payment. The drawback is that you’ll end up paying more in interest over the life of the loan than with a shorter-term mortgage loan. The same goes for a mortgage refinance loan. The longer the term, the more interest you’ll pay over the life of the loan. Mortgage refinance is a great way to lower your term and your rate and save on interest. Just keep in mind that mortgage refinance has closing costs just like a regular mortgage loan. Click to learn more about mortgage loan and mortgage refinance options at Choice One Community Credit Union.
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Consider government-backed mortgage programs
Talk to your lender about government-backed mortgage loan programs, including Federal Housing Administration (FHA) loans and VA (Department of Veterans Affairs) loans. If you qualify for either, you may see an even larger rate reduction. Lenders, including Choice One Community Credit Union, offer these types of mortgage loans as well as traditional home mortgage loans.
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Ask about mortgage loan discount points
Considering paying discount points to lower your interest rate? Many lenders will let you buy down your interest rate using what is referred to as points. You can compare this into the overall interest savings as compared to paying no points.
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Compare the down payment requirements
You may see a big difference in the required down payment among various mortgage lenders. Do some calculation to see how various down payments will impact the amount you borrow, your rate, and the overall interest you will pay.
Applying for a mortgage loan or mortgage refinance
When looking for a good mortgage lender to include in your comparison, be sure to include Choice One or your local credit union. You can also ask friends and family for their recommendations. Look for low mortgage loan rates, as well as low closing costs. Typically rates for refinancing your mortgage are the same as a new purchase. Remember that your credit score, debt-to-income ratio, and the type of interest rate for which you are applying (fixed or adjustable) will all affect your rate. If there’s time, work on improving your credit score. Lenders look at your credit score to help determine your creditworthiness. The higher your better score, the better the chances of getting the lowest mortgage loan rate possible.
When it’s time to apply, we hope you will consider Choice One Community Credit Union.