Compare Interest Rates
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Prospective borrowers can compare interest rates on mortgages offered by different lenders, with financial calculators and other tools offered online. There are several other things to consider, such as quoted rates, closing costs and points, while entering a mortgage financing deal.[br]
How to Compare Interest Rates for Mortgage Financing
Although people do compare interest rates while looking for mortgage financing, it is mostly about selecting the best out of the worst. Moreover, an average customer may not be aware of parameters like origination fees and discount points that can add to mortgage costs. Here are some factors to consider while opting for a mortgage financing deal.
Points: This is the upfront fee you must pay the lender at closing your mortgage. Many lenders let you choose among various point and rate combinations for the same product.
Closing Costs: This consist of title and escrow charges, loan related fees, transfer charges and government recording. These can add substantially to the cost of your loan. Therefore, it is essential to compare lenders’ loan related fees (money charged to process and approve the mortgage loan) before opting for a particular lender.
Loan Features: When you compare interest rates, you should also compare loan features offered by various lenders. These include maximum loan-to-value (LTV), credit and cash reserve requirements, mortgage insurance payments, qualifying ratios and so on. Moreover, check if there is any penalty for prepayment. Also enquire about conversion options, such as converting fixed rate to a variable rate and rate reduction options.[br]
Lock-in-Period: Lock-in-period is the period during which the points and the interest rate are guaranteed. When the lock-in period is longer, the price of the loan is also higher. Borrowers must have a lock-in period that is long enough to allow for settlement before the lock-in expires.
When you compare interest rates, make sure that you are comparing interest rates offered by different lenders on the same day, because interest rates change daily. Apart from comparing interest rates, be sure to compare the factors discussed above. That is, always compare the total costs of the loan that include all the obligations.
