3 Most Important Factors When Shopping for a Mortgage

When shopping around for a mortgage, there are many things to consider.  According to home loan specialist, Jaison Wojdyla from West Penn Financial, the 3 most important things to look at when shopping around for a loan are the closing costs, interest rates, and location of the lender.

• Closing costs:

Make sure that you ask each lender you speak with for an estimated closing cost sheet, or Good Faith Estimate.  This will show you all of the cost that are going to come your way when purchasing your home.  Have them go through it with you step by step so that you are comfortable with all of the numbers before leaving the table.  Be wary of a lender that has significantly lower closing costs than average, often (but not always) this means that something has been omitted from the cost sheet that you will have to pay later.  This is when pre-closing surprises come up, but if you do your research ahead of time and get quotes from more than one lender you can compare the costs and see that one sheet shows the transfer tax and the other doesn’t….thus you are able to make an educated decision.

• Interest rate:

Loan Products can vary from lender to lender, but for the most part you should be able to compare apples to apples, in other words, if one lender is giving rates for a Conventional loan and the other is giving rates for FHA you can not expect them to match up.  The best thing to do is ask for multiple cost sheets from each lender– one each for Conventional, FHA, and VA (if you qualify) and in terms of 15 and 30 year(that is up to 6 different GFE’s).  Now you have everything you need to compare lender to lender without the confusion of differing terms.

For instance, you will see that if you opt for a 15 year loan instead of the traditional 30 year, you can get an interest rate of nearly 1.5% less!  That can save you thousands over the life of your loan, not to mention after 15 years you own it free and clear!

• Location of the Lender: 

And lastly make sure you lender is local.  Do not use out of area or out of state lending companies or — even worse Online lenders.  These types of lends are notorious for such things as giving inaccurate cost estimates, raising interest rates at the last minuet, and even not funding your loan at all at closing!  Using a trusted local lender can keep that from happening.  Ask for referrals from friends, family, and your Realtor — This is the best way to make sure your purchase will go smoothly.

 

This entry was posted on February 5, 2008 at 1:11 pm and is filed under Real Estate Basics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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