Compare mortgage rates before making a loan commitment; it is one of the smartest things you will do in life. This is because a home is the biggest investment for most people and if you take some time to compare mortgage interest rates, you are definitely in for a better bargaining position.

Apart from shopping for low interest rates, you should also give a lot of importance to aspects like closing costs and points. Closing costs are associated with transfer of property ownership and can vary from lender to lender. They can include things like titles fees, court fees, appraisal charges etc. The points are financial charges that are included in the loan amount in the beginning. They can be paid up-front or across the tenure of the loan; simply put, ‘points’ can increase the cost of the overall loan. So make sure you choose the loan that has low closing costs and affordable points.

Lenders also perceive credit situation differently. While most of them shy away from giving mortgage loans to people with high credit risk and bad credit history; there are some of them who are okay to give loans to people who still have bad credit history but have the ability to pay back the loan according to their current financial standing. There are others who offer different rates to low risk and high risk individuals.

Contact the mortgage company and find out how much amount you are eligible to get as loan. This is known as prequalification; this will give you an idea of how much you should arrange as down-payment. On some of the reputed mortgage websites, you will see APR tool that will help you compare interest rate annually of one lender versus the other one.

Origination points or ‘lender fees’ should always be low when you look for a mortgage loan. You may get short-term benefit in terms of paying low upfront amount if you choose the loan with the least number of points; but if you pay in more points, you can reap the advantage of lowered monthly payments. As far as interest rates are concerned, they can change on a daily basis and even for many times during the course of a day. So the first thing to keep n mind is to compare lenders on the basis of the same interest rate.

The other criterion is to check the period for which a lender can guarantee the interest rates and points that are quoted. The lock-in periods usually are from 15 to 90 days. This means, if the lender offers a particular interest rate for a definite sized loan, it will stay that way for a particular period, no matter how much the interest rate rises or dips in the following days. High priced loans come with longer lock-in periods. Finally, make sure you compare interest rates, closing cost and points for the same type of loan. This means, if you are looking for adjustable rate mortgage; make sure you compare interest rates, points etc of the lenders for this type of mortgage only and not for fixed-rate mortgage.

Author Bio: Covering the real estate, finance and home loan market. More information to compare mortgage rates online.

Category: Finances
Keywords: mortgage, loans, lenders, online