Friday, July 25, 2008

How To Compare Mortgage Loans Efficiently

By Chris Channing

Mortgage loans span many years, so much time should be spent in the planning phase of obtaining the loan. There are four main things to consider when sizing up the competition: term, rate, points, and fees. Borrowers should keep each point in mind for obtaining best results in mortgage loan rates.

The term of a mortgage loan is essentially how long it is scheduled to last. The average mortgage loan will either be 15 or 30 years in length. Unlike most other types of loans, the mortgage loan is much more serious and able to put borrowers into inescapable debt. Likewise, borrowers need to ensure that throughout the entire term they are going to be financially stable enough to repay the debts owed.

APR, or annual percentage rate, is a term that most are familiar with. The APR is the "rate" in the four aspects to be learned in mortgage loans. The rate will determine how much the borrower pays in interest rates each pay period. Obviously, a lower rate is better for the borrower. Getting a lower rate means have a good credit score, collateral, and financial history that can show responsibility in paying back loans.

Points are expressed as 1% of the total mortgage. It's generally best to rack up as much points as possible to keep the interest rate down. Lenders like to put many gimmicks and other types of marketing ploys in the points area, so borrowers should keep an open mind when dealing with them. Paying off more points upfront is good if the homeowner intends to keep their home, otherwise the upfront costs are too great to turn much of a profit.

Lastly, we have fees. All types of transaction fees, payback fees, underwriting fees, and even closing costs will give the borrower a tough time in closing the deal completely. Fees will vary widely from one lender to another, so it's good to get as much information as possible before signing the dotted line. In addition, most reputed lenders will show all fees upfront- so a borrower shouldn't have to read the fine print to catch any fees that weren't discussed.

Mortgage loans take much planning to successfully take advantage of. Likewise, it is generally a good idea to consult a financial consultant to get the best advice for one's particular situation. It may also prove worthy to search online Internet resources for more information, tips and tricks, and guides in getting the best rate on a mortgage loan possible.

In Conclusion

A mortgage loan isn't as scary after we dissect it and warn borrowers of the harm they can cause. But nevertheless, they can still cause much trouble to one's finances- so it can't be stressed enough that consulting professional opinion is necessary. Consulting Internet resources and online lenders is another good way to find counseling- sometimes without any price at all!

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