Comparing mortgage prices or housing loans will help you get more favorable financing terms. A mortgage – whether for the purchase of a home, a refinance, or a loan on the liquid value of your home – is a product equal to a car, and therefore, the price and the terms can be negotiable. You will want to compare the total cost of obtaining a mortgage, since negotiating and comparing prices could save you thousands of dollars.
- Obtain information from various credit sources
- Get all the important information about costs
- Get the most favorable treatment
- Remember: Compare, verify and negotiate
- The law requires equitable loans
- Credit problems? Still, you can compare, verify and negotiate
The mortgage loan spreadsheet can help you too
Take it with you when talking to each lender or broker and write down the information you get. Let financial institutions and brokers compete for your business by letting them know that you are trying to get the best deal.
Charges for loan initiation are charged by the lender for processing the loan and are usually expressed in the form of a percentage of the loan amount.
Operating, liquidation or closing costs may include application fees, deed investigation, deed summary, deed insurance, land survey charges, deed preparation fees, mortgages and settlement documents, attorney fees, charges registry and notary, valuation and credit report. Under the Real Estate Settlement Procedures Act (RESPA), at the time, or within three days after submitting your application, the debtor must receive a good faith estimate that contains the probable closing costs represented by an amount or the scale of each one.
Excess is the difference between the lowest available price and any higher price that the buyer agrees to pay for the loan. Frequently, the bank officer or loan broker is allowed to retain part or all of this difference as an additional remuneration.
The mortgage is the document that the borrower signs when originating a loan for the home and that gives the lender the right to take possession of the property if the debtor does not finish paying the loan.
Institution of savings and loans is the general term with which it is denominated to financial institutions of saving and associations of savings and loans.
Escrow is the retention of money or documents by a neutral third party before closing the deal. It can also be an account in the possession of the lender (or service institution) to which the owner pays an amount for taxes and insurance.
Conventional loans are mortgage loans that are not insured or guaranteed by government entities such as FHA (Federal Housing Administration), VA (Veterans Administration) or Rural Development Services (former Farm Administration for Farmers or FmHA).
Adjustable-rate loans , also known as variable rate loans, are generally offered at a lower initial interest rate than fixed rate loans. The interest rate fluctuates during the repayment term of the loan based on market conditions, but the loan contract usually sets minimum and maximum rates. When interest rates rise, monthly payments also generally go up. And when interest rates fall, payments may fall.
Fixed-rate loans generally have amortization periods of 15, 20 or 30 years. Both the interest rate and the monthly capital and interest rate remain fixed for the duration of the loan.
The points are charges that are paid to the lender for the loan
One point equals one percent of the loan amount. Generally, they are paid in cash upon closing the deal and in certain cases, the amount of the points can be included in the loan, although in this way the loan amount and the total cost increase.
Private mortgage insurance (PMI) protects the lender against losses due to delinquency by the debtor. Generally, it is required when the initial payment is less than 20 percent of the sale price, or when the refinancing amount is greater than 80 percent of the valuation value.
The interest rate is the cost of the loan expressed in the form of a percentage rate
Interest rates may change according to market conditions.
Annual interest rate (APR) is the cost of credit expressed as an annual percentage rate. The APR includes the interest rate, points, broker costs, and other credit charges that the debtor must pay.
Unchangeable interest rate refers to the agreement that guarantees the buyer a specific interest rate for the mortgage loan provided that the latter closes the deal within a set period of time, for example, 60 or 90 days. Generally, this agreement also specifies the amount of points that will be paid when closing the deal.