Banks and Mortgages
Traditionally, people who need a mortgage go to a bank. They feel that a bank has lots of money and is more likely to give them a loan. When you go to a bank, you will be offered the choice of several different loans – assuming you qualify – but they will all be from the same financial institution; the bank you have chosen. Shopping For a Mortgage Find Financing Online & Compare interest rates .
The loan officer at the bank you‟ve chosen works for that bank and their job is to offer loans on behalf of the bank. The bank loan officer will not get a commission for successfully signing you up as the bank‟s customer.
This mean that you are stuck with the interest rate they offer, so if you see another bank offering better interest rates, go there instead. Or you may be the type of person who enjoys a bit of haggling, in which case you may be able to point out the difference in what another bank is offering.
If you are persuasive enough, the loans officer may try to match it – if he is allowed. One point in favor of using your local bank is that it is there on the spot and understands exactly what is meant by various real estate terms. This means there should be minimal delays in getting closure, once all the details have been sorted out.Shopping For a Mortgage Find Financing Online & Compare interest rates .
If you use one that is a long way off, there could be delays. Banks are financial institutions – they don‟t really want to get into real estate. So they do their utmost to help you keep going financially when things get tough. They may be happy to re-finance your loan if you lose you job and find it difficult to meet payments.
This is because they know that if they have to foreclose, they also have to pay all the costs associated with it, like taxes and upkeep. Banks would much prefer to make money via their interest rate, than pay it out in these costs.
This is encouraging for borrowers as often with just a little help from their bank, they can avoid losing their home and even take steps to make living a little easier by negotiation. This should be done in a pro-active manner.
Never wait until the debt collector is ready to throw you out of the house before asking for help. While it may be harder for the new borrower to get a foot in the banks lending door, those who are already in will usually be helped if they ask. And making it harder to borrow is not such a bad thing. It‟s better not to borrow at all if the result means financial hardship or even bankruptcy further down the track.
Brokers and Mortgages
When looking for a mortgage many people will go to a mortgage broker. Mortgage brokers have access to many lending plans from many different lending institutions. A good broker should be able to get the best mortgage deal for you – and may even be able to get a far better interest rate than your local bank is offering.Shopping For a Mortgage Find Financing Online & Compare interest rates .
The trouble is that brokers need to make money to live too, so where are they going to get it from if they don‟t work for a bank or other lending institution? You, of course! They add a bit on to the interest rate of your loan and have that as their commission. They may also get paid an extra commission from the lending institution they get your loan with. While there are some baddies out there, most brokers are honest.
They have to be to keep their jobs. It doesn‟t take long for a bad reputation to spread. And there are plenty of laws to protect you from a shonky broker. Competition for work is hot, so brokers need to stay honest and give good deals to keep themselves in a job. That doesn‟t mean you shouldn‟t take steps to protect yourself. Always be sure that you get everything in writing from your broker, and then you will be protected. Remember too that when brokers quote you a price they can lower it.
They‟ve added their fee on and will no doubt have made sure they get plenty. You can‟t blame them for that. But feel free to negotiate to lower the interest rates. Your broker may even expect you to do this and have accounted for it in his original quote. So don‟t feel that you are stealing bread from his mouth. And while you are at the negotiating table, you can also look at his fees. He is allowed to charge you a fee by law, but you are also allowed to try and get them reduced.
Don‟t accept too high a fee from a broker, because he is making his money off of those extra interest rates. On the other hand, you should try to be reasonable. If you beat him about too much, he will lose the incentive to get you a good deal and work with you. If you hate trying to negotiate, let the broker do it for you by speaking to two or three and let them compete with each other.
This way you will be the winner, because they will vie to get your custom. You can initiate the first steps online to make the task less daunting. Once you go to a broker‟s website, you‟ll find it easy to put your first details into their question boxes and get the ball rolling that way.Shopping For a Mortgage Find Financing Online & Compare interest rates .
Should You Find Financing Online
These days so much is done online that it seems everything we could possibly want is available. You can buy clothes, sign up for newsletters about everything under the sun, find out all about the news, wind and weather and generally have fun – all online.Shopping For a Mortgage Find Financing Online & Compare interest rates .
So what about the more serious side of life – that of getting finance to purchase your dream home? Should that be done online too? Is it safe? Certainly the first steps to finding finance can and should be done online. By researching various sources of finance, you can compare their rates and requirements in just a few minutes.
To do this by going to each one physically and speaking to the loan officer would take days or weeks. It takes only a few moments to log into the website of a bank, other lending institution, or a broker and find out what they can offer you. They too want to save time and money. They do this by making the online experience as easy and helpful as they possibly can.
Many have online calculators freely available to any would-be customer to use. While these are limited in actually getting your loan settled, they provide a vital first step in seeing what is available and whether you fulfill the criteria. This saves time spent unnecessarily by a loans officer in telling you what you need to qualify.
To actually find financing online, you need to be a bit more wary. Make sure you are dealing with a reputable and honest company, whether it is a broker you are looking for or an actual financial package. Another thing to watch for is if the company is close to your home. If you choose to deal with a lending institution on the other side of the country, there could easily be delays.
These come about by the simple fact of them not understanding exactly what some terms mean. They need to be sure exactly what is meant in the contract, and so there is a delay while they find out. While it may not be much, it is something you need to be aware of.
There are many different types of mortgages, so when you are researching take your time and don‟t rush it. If you don‟t know too much about the topic, then you‟ll need to do thorough research. If you don‟t have the time or inclination, it may be a better option for you to go straight to a broker or a bank.
What You Should Watch out for When Shopping for a Mortgage
When shopping for a mortgage there are some things that you should know to help streamline the process. One of these things is to present your own credit rating to the lender, rather than waiting for him to get it.
In fact, you should get this credit rating several months in advance of shopping for a mortgage so that you can be sure it is a good rating. If it is not, then you can do something to clean it up before talking to any lender. You can order a free copy of your credit score by going to www.annualcreditreport.com.
You can also phone 1-877-322-8228 or fill in an annual credit report request from the Federal Trade Commission. Once you have your credit score, it is important to check it for inaccuracies such as late payments. One of the most important things to watch out for when choosing a mortgage is the type of interest.
If you don‟t want any nasty surprises about the monthly costs soaring, then you would choose a fixed interest rate. While this may seem to cost more, if interest rates soar, you can laugh because you won‟t be affected.
If you‟ve chosen an amount that you can comfortably afford to pay back each month, you won‟t be in danger of losing your home. An adjustable rate mortgage – where the interest rates start out low and then rise – is more suitable for when you know you will not be in the home for more than say, three years.Shopping For a Mortgage Find Financing Online & Compare interest rates .
Then you‟ll be selling it before the high rates of interest apply. Or if you are sure your income is going to increase in a few years. What if all goes well financially and you decide to pay extra off your loan to get it finished with ahead of time?
If you haven‟t checked the terms of the loan you may find that you are penalized for doing what seems to be a good thing. Many loans have a penalty clause that states you have to pay extra if you want to exit early.Shopping For a Mortgage Find Financing Online & Compare interest rates .
This is because the quicker you pay it off, the less interest the lender makes. To make a penalty seem less likely, the box that is checked often contains the wording: “a penalty may be applicable”. There is usually no „may‟ about it. Read „will‟ for „may‟. Negative amortization should be avoided at all costs.
You want to see the amount you must pay back decrease, not increase, but with negative amortization this is what could happen. An adjustable mortgage with a payment cap is the bad apple. If the payment cap doesn‟t cover the whole interest payment, then that amount is added to the principal.
What to Compare When Shopping for a Lender
It is always wise to make comparisons between different lenders when you are looking for a mortgage. Only by comparing the different rates and terms can you find the best deal. Some financial institutions may be operating as both lender and broker, so be sure to ask. Otherwise, you may be hit with extra costs on closing that you hadn‟t expected.
You need to know all the costs that you are expected to pay. Finding out the interest rates and monthly repayment is important, but it is not enough. You need the type of loan and the loan term on the same amount from different lenders.Shopping For a Mortgage Find Financing Online & Compare interest rates .
Then you‟ll be able to compare them equally. You need to ask about the annual percentage rate (APR). This includes not only interest, but also other costs associated with the loan. There could be broker‟s fees, points or other credit charges. Points are the fees that are paid to a broker. Ask them to be quoted in a dollar amount rather than as points, as this will give a truer picture of your costs. Ask for a list of fees.
These may not even be mentioned until closing if you don‟t ask. They can include not just brokers fees, but closing costs, transaction costs and settlement costs. In many cases, these fees are negotiable. There are also application and appraisal fees that are payable before closing. Watch out for no-cost loans as they often have higher interest rates. Compare the down payment required on your loan.
Some lenders want 20% and if you don‟t have it, you‟ll have to pay private mortgage insurance (PMI). Others lenders will by happy with 5% down payment and not ask for insurance. If you can take advantage of a government-assisted scheme, then the down payments are frequently much smaller.Shopping For a Mortgage Find Financing Online & Compare interest rates .
If you have to pay PMI, ask what the monthly payments will be with that included. When shopping for a lender be sure to compare apples with apples. If you compare different loan types for different lenders, you won‟t get a true picture of the differences.
That is not to say you should not compare different types of mortgages. You need to compare mortgages just as carefully as you compare lenders. Once you understand the basic differences in the products available, you‟ll be able to make the choice that is most suited to your particular situation. Who wants to pay more than they need to?
Read Also :
- Benefits of refinancing Your Mortgage
- How to Refinance Your Mortgage
- Why Should You Refinance Your Home Mortgage?
- Understand Mortgage Refinancing & Home Equity Refinancing
- Selecting a Mortgage Refinancing Company : Mortgage refinancing tips
- Home with Bad Credit , Mortgage Refinancing after bankruptcy & scams
- How Much Mortgage You Can Afford : Motgage affordability
- Tips for first time home buyers : Home Mortgage Loan