Compare Mortgages

Whether you are ready to get your first mortgage, or you are a seasoned veteran of the mortgage game, there are a lot of tips you can use to help keep your mortgage rates low and your total costs associated with the mortgage note low. Many of these tips only take a few minutes and can help save you thousands of pounds over the life of the mortgage note!

First, like with any other purchase – shop around! Talk to several lenders and brokers about what they can offer you. You’ll find that you can often find a lot of competition amongst mortgage lenders even during tough economic times. If you have a stellar credit rating you will often find that the mortgage writers want your business no matter what the economy is doing and will fight for it – which is always an advantage for you! Some people chose to go to mortgage brokers to help them shop for a good deal. Brokers don’t loan you the money directly, but rather work with lenders to find you the best deal possible. It’s important, though, to ask them how they get paid and who they work with. You want to find a broker who can work with a wide variety of lending institutions and who isn’t paid by the lender (at least not totally). In this way it ensures they are looking out for your interests and not just their own financial gain.

Next, get a list of all the fees and other costs associated with the mortgage. Don’t be afraid to question fees or ask for them to be lowered. You typically won’t get every fee changed but you will be surprised how much can be changed by just asking. Be on the lookout for any extraordinarily high fees that seem out of place. Don’t let the money you save in interest be eaten through outrageous fees!

Watch out for PMI! PMI, or Private Mortgage Insurance, is typically required when you have less than 20% equity in your home. It’s an insurance policy that protects the lender from you not paying your note. It’s one of the many reasons why you should always strive to put down the largest down payment you can comfortably afford. If you can only afford to put down say 18% of the purchase price ask your lender about doing away with PMI. The 20% rule isn’t written in stone, and mortgage lenders will work with those who have good financial track records.

Once you find the rates you like on the terms you like it is important to lock in the mortgage. Always be sure to get everything in writing – verbal agreements just won’t do. Interest rates can change overnight and fees can mysteriously go up when it comes time to sign the final papers. Be locking in rates and other fees now you can avoid the hassle of having to go through it all again at closing time.

Compared to other homeowners, Californians pay one of the highest premiums in the country for their warm, sunny climate. According to the National Association of Realtors, the median price for a single-family home in California topped out at an eye-popping £542,000 in fourth-quarter 2005. While finding the best possible mortgage loan rate is important wherever you live, prices like these underscore the importance of doing your mortgage homework if you live in California.

According to “Looking for the Best Mortgage”, an article published by the Federal Reserve, getting a good rate on your California mortgage is basically a three-step process. The Fed’s strategy, which it calls “Shop, Compare and Negotiate”, says a mortgage is essentially a product like a car. Just like the price of a new Caddy, the price and terms for a home loan are often negotiable. So, says the Fed, it pays to shop, compare and negotiate.

The first step in the process — shopping for the best home purchase loan, home equity loan or refinance loan — is easier than ever. That’s because of the dramatic increase in the number and popularity of online lenders. Nationally recognized lenders like Home 123 or Ameriquest now offer a wide variety of mortgage products in many states, including California. Besides offering mortgage products that combine convenience and flexibility, online lenders are also available 247 to give you a free mortgage quote  — something that can’t be said of traditional brick-and-mortar lenders like banks or credit unions.

Shopping around for your California mortgage is just the first step. After that, you’ll want to compare the offers you’ve received. Make a checklist that contains all the key information about rates, points, fees, the down payment, and the cost of private mortgage insurance. Set up the worksheet in a spreadsheet program like Microsoft Excel and give each lender a column of its own. That way it’s easy to compare lenders — and the bottom line — side-by-side.

Finally, says the Federal Reserve, don’t assume a lender’s offer is the last word in your search for the best California mortgage. That’s because mortgage lenders frequently offer different terms and rates to different customers, even if those customers are equally qualified for a mortgage loan. It pays to negotiate, so now is the time to show a prospective lender that you’re a savvy consumer shopping for the best possible deal. Don’t be afraid to ask for lower fees, a lower rate or fewer points!

In conclusion, when buying a home or negotiating a home equity loan or refinance loan, don’t forget to shop around, compare offers and flex your negotiating muscles. That way you’ll get the best possible deal on your California mortgage!