Knowledge is Power When Mortgage Shopping

When Shopping for a mortgage, having the knowledge base will help you from decide the best program for your circumstances....

Shopping for the best rate doesn’t have to be frustrating provided you have the proper knowledge when comparing mortgage loans. Lenders love to play tricks in order to entice you to give them your business.

However, when you compare loan programs it’s essential that you not only compare interest rates when choosing which lender to go with.

For example a lender this afternoon offered me a rate of 5.625% fixed for thirty years with zero points.

The loan sounded very good until he said there was a lender fee of $2,495 in addition to the credit report fee, government charges, local taxes, and appraisal and attorney fees.

This particular lender said this fee was for the application and commitment fee. The loan amount was approximately $200,000 which was equivalent to almost a 1 point loan, (meaning 1 percent of the total loan amount).

Therefore, the other lender that was charging 5.625% with a ½ point and a $395 application fee with no commitment fee was a much better deal.

It’s essential to request a good faith estimate and to compare all of the lenders offers side by side.

The good faith estimate is an approximation of all of the fees associated with the loan. The good faith is required by law to be given to the potential borrower.

Make sure to request one and to look at all the fees, because that low rate, may not be so low after all.

About the author John DiDomenico is the founder of Mortgage Moola who helps educate homebuyers and homeowners on their purchase and refinance needs via the
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