Mortgage quotes are a dime a dozen. So are mortgage companies, which range from legitimate brokers to lenders who pop up out of nowhere. Learn some basic mortgage terms and ideas to make sure you get the best deal and don't fall for unscrupulous brokers.
Mortgaging 101
It's not easy to get a mortgage. Its basic terms and ideas, on the other hand, are easy enough for anyone to grasp. Review this small collection of facts because they will help you deal with mortgage companies.
Here are a few words and phrases, along with a brief description of what they mean.
Loan Term
The loan term is how long you have to pay back the loan. Most people choose between 15 and 30 years. "Loan term" is another name for "term of repayment."
Rate of Interest
How much it costs you to borrow money is shown by the interest rate on your loan. This is calculated as a percentage of the loan amount, charged over a certain time period. There are two kinds of interest rates when it comes to mortgages: fixed-rate and adjustable-rate. In a fixed-rate mortgage, the interest rate stays the same for the whole loan period. In a mortgage with an adjustable rate, the interest rate starts out low and goes up slowly over the life of the loan.
Extra Charges
When you get mortgage quotes, you will find out that you have to pay more than just the loan amount and interest. There are also other fees, and most of them have to do with how the loan is processed.
Rate based on a year
The amount you have to pay is called the Annual Percentage Rate, or APR. This includes the interest rate on the mortgage and any other fees. Pay attention to the APR when comparing mortgage quotes. By comparing APRs, you can find out which lender is giving you the best deal on a loan. Some lenders try to make their quotes more appealing by offering low interest rates but high fees.
Contingencies
A typical contract has clauses that require key parts of the house to be inspected before the sale. These are called "if-then" clauses. When getting mortgage quotes, ask about what could go wrong.
Mortgage Lender Versus Mortgage Broker
To someone who doesn't know much about mortgages, having to choose between a mortgage lender and a mortgage broker may seem silly. In the end, it all comes out the same. But people who know can tell you that a mortgage lender and a mortgage broker are not the same thing. A lender is a person who works at a place that lends money and will give you money for your house. On the other hand, a broker is someone who will shop around for you so that you have options for mortgage loans. In the short term, dealing with a mortgage lender is easier. But in the long run, it might be better to work with a mortgage broker, who might be able to get you better deals. Before getting a mortgage, the best thing you can do is get quotes from both mortgage lenders and mortgage brokers.
Before you sign anything, you should take the time to learn everything you can about the deal and the market. So, you can make decisions that are smart and responsible.
