Despite the downturn in the US economy, real estate in the Caribbean remains attractive to investors. The warm climate, lush environment, and variety of the islands appeals to many tourists, thus creating the opportunity for investors to generate rental income. Thoughtful selection of best mortgage loan, for the Caribbean market, involves many of the same principles as selecting any other mortgage, although the terms for Caribbean properties may differ from standard loan terms.

Different brokers or lenders will offer different interest rates. Investors should ask brokers or lenders for a list of current rates, and then, should ask if those are the lowest quoted rates for the day, or for the week. In addition, investors should ask about the Annual Percentage Rate, or APR, which expresses the interest rate, accounting for points, broker fees, and certain other charges.

Points are fees paid up-front, in exchange for a lower interest rate. When asking about points, investors will get a better idea of the amount they will pay, by asking for a dollar amount, instead of asking just for the number of points. Online calculators may help investors to decide whether paying points, or making a larger down payment instead, will get them the lowest overall loan costs.

All loans come with associated fees. Some fees are paid when investors apply for loans, and some are required at the closing. Investors should ask their lender or broker what is included with each fee, and should ask for an explanation of any fees, which they do not understand. In many cases, fees are negotiable, so investors may save even more money by asking lenders or brokers to adjust their quotes.

Some loans require private mortgage insurance, or PMI. PMI is often required when the down payment is less than twenty percent on a standard loan, but, for a Caribbean mortgage, lenders may expect a different down payment. If PMI is required, investors should ask what the cost will be, and what their monthly payment will be, with PMI included.

After comparing mortgages, investors should lock in their interest rate. A locking-in agreement includes the agreed-upon interest rate, the number of points to be paid, and the length of the lock-in period. Lenders or brokers may charge a fee for locking in a rate, but the fee may be refundable at closing.

Investors do not necessarily have to visit their Caribbean property. Interest rates follow US variable rates, and lender costs are usually added on, as additional interest. Down payments may be slightly higher than those required for standard loans, and lenders may require minimum loan amounts, and shorter maximum terms.

Knowing the monthly payment does not provide enough information to judge the total cost of loans. Investors should know the amount, the term, and the type of their mortgage product, as well as being cognizant of the interest rate, and associated fees. With a little research, selection of best mortgage loan, for the Caribbean market, may save investors hundreds of thousands of dollars, over the life of the product.

Author Bio: Global Jamaica Finance institution offering commercial and personal banking services including a business plan, online banking, credit card, loans and more.

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