Buying a house is a big investment, but it will pay off in dividends if you can understand how to navigate the mortgage process. The best time to begin doing a interest rate comparison is when you are not in the market to buy a house. So, you may be just starting to think about buying your own home and you need to put together a budget and a savings plan. The first place to start is with a mortgage rates comparison. Using at least three different sources to compare rates. You can use the internet, a newspaper, and local banks. Comparing rates over the internet is less personal, but it can be used as a way to research the relevant terminology and to gain general information.
Contacting several different banks before you are actively searching the market will give you the time to concentrate on understanding the information and becoming familiar with the process without the stress of losing the “house of your dreams”. Visiting a few banks for a mortgage rates comparison will help you gain experience talking to a loan officer. The main thing to understand about comparing loan rates is to do rate comparisons on the same type of loans. For example, if you decide that a short term fixed rate mortgage is what you are considering, then that is the type of mortgage that you should be looking to compare rates on.
Here are some key questions to ask:
-What is the current interest rate for that particular loan?
-Are there points associated with this loan? Each point has a net percentage value that is worth a discount on the interest rate of the loan. However, you will be paying that money up front at closing time.
-Does that bank provide an estimate of all fees and closing costs?
-What is the minimum down payment required for this type of loan?
-What paperwork is required for obtaining a pre-approval letter for the loan?
Understanding the main factors that will affect the the amount of money you will need to close the deal on a house is the key to making a successful mortgage rates comparison. And, calculating how much interest you will be paying is where you want to concentrate your attention to save money over the life of the loan. Because the money paid in interest goes straight to the bank, it does not count toward the balance of your loan.