Mortgages And How To Compare Offers For The Best Deal | Mortgage

Mortgages And How To Compare Offers For The Best Deal

When shopping for a home loan, it is crucial to make sure that you compare mortgage loan offers to see if you are getting the best deal. But for many home owners, comparing home loans is not an easy task. Below are some easy steps so you can do to compare several different mortgage loan proposals and make sure you are getting the best conceivable home loan.

by DavidWhite

When shopping for a home mortgage loan, it is important to make sure that you compare home loan offers to see if you are getting the best deal. But for many home owners, comparing mortgage loans is not an easy task. Below are some easy steps so you can do to compare several different mortgage loan proposals and make sure you are getting the best conceivable home loan.

Verify that your loan originator has a National Mortgage Licensing System Number

The first step you will need to do is make sure that you are dealing with a licensed mortgage originator. Effective in 2010, both mortgage bankers and home loan brokers have to be licensed. Each loan officer must have a license number that is part of the National Mortgage Licensing System (NMLS). Each loan consultant must display their NMLS number on any form of marketing materials, website, and any other advertisements. You should always ask a loan officer if they have a NMLS number. Finally, loan originators can only do loans in states they have a license in. For example, if I have a mortgage license in Texas, then I can only do Texas home loans.

Compare Apples to Apples

The hardest thing to do when shopping for a home loan is trying to compare mortgage offers from all the different lenders. The reason for this is that many lenders have different closing cost and offer different rates, but if you understand how to ask the right questions, this process can be much simpler.

First, don't ask the question, "What is the best rate you can give me?" This question is so open ended and closing cost plays a major factor in the rate. The best rate a lender can offer you will have the highest closing cost. When trying to compare mortgage offers from other lenders, this can be tricky. Instead, you should ask the question, "What is the mortgage lender closing cost associated with a 30-year FIXED rate mortgage at X%?"

This question is direct and will make choosing a lender much easier!

Every lender can tell you what the lender closing cost will be at a specific rate. For example, Lender A charges $2100 in lender cost for a rate of X% and Company B will charge $2500 in lender closing cost for the same rate. When comparing these numbers, it is easy to see that the Company A is offering the best deal!

When comparing closing cost, only compare the LENDER closing cost. Most home loan lenders will estimate 3rd party charges like title company fees or attorney fees and prepaid items like property taxes and home owners insurance. These fees are estimated and are charged by other companies other than the lender . Let's use the same home loan lenders in the example above and say that Company A estimated prepaid and 3rd party fees at $3500. Company B estimated these fees at $2500. When you add their home loan lender fees to the closing cost estimate, Company A is at $5600 and Company B is at $5000. It looks like Company B is offering the best deal , but since these are only estimates, Company A is still offering the best deal since they have $400 less in LENDER fees. Think of LENDER fees as the charge for the interest rate. These are also the fees that the home loan lender has control over!

Finally, when comparing home loans, compare like rate offers meaning that if you are getting a quote for a 30-year loan at 4.75%, make sure that all offers you are comparing have the same rate. Also, make sure you are comparing the rate with the same mortgage program. For example, compare FHA home loan rates with other FHA home loan rates. You do not want to compare a FHA home mortgage loan with a Conventional home loan since these are two different types of home loan programs.

Hopefully this will help when shopping for a mortgage loan.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

David White is a Mortgage Advisor specializing in Texas Home Loans. David has over 10 years experience in the mortgage industry and can assist you with finding the right Home Loan. This article, Mortgages And How To Compare Offers For The Best Deal is available for free reprint.