There are many things to consider when shopping interest rates. When most homebuyers are shopping for a mortgage they only look at the interest rate and points. There are a number of considerations beyond the interest rate and points. Below are some important things to consider when shopping for a mortgage.
1. Mortgage loans have so many variables that you can’t just view a rate quote online and be assured it applies to you.
Interest rates are priced differently according to:
.property type (single family detached, condo, multi-family)
.state or region the property is located in
.occupancy type (primary residence vs. vacation home vs. investment property)
.how many days the rate is “locked-in” for (15 days, 30 days, 45 days, or more)
.whether or not there is a pre-payment penalty
2. Is the lender you are looking at an internet lender, mortgage broker, mortgage banker, or a bank? Knowing who will ultimately be processing and funding your loan, helps to insure you will have a smooth process. Is the appraiser a local company? All of this affects your ability to get to the deal you signed up for, and getting to the settlement table on time.
3. What are all of the fees, such as processing fees, underwriting fees, appraisal fees, credit report cost, etc. Does the loan have an origination fee, discount points, or broker origination fees? There are many third parties to a loan, and they all get paid. There is no such thing as a loan with no fees. If someone offers you a loan with no fees, you are paying for it somewhere else (in the form of a higher interest rate, or a pre-payment penalty).
4. Are the quotes current, and are all the options you are considering quoted on the same day?
5. Did you get the APR (Annual Percentage Rate)? Many times lenders will quote you low interest rates, but then have a significantly higher APR’s, which indicates that they have higher than normal closing costs.
Most consumers are so focused on the interest rate, that they take their eye off of the ball in other areas like closing costs. For questions or comments, please feel free to contact me at Ingrid.Quinn@cobaltmortgage.com or visit me at http://www.scottsdalemortgageexpert.com or http://www.cobaltmortgage.com/ingridquinn.