When shopping for mortgages, there’s a tendency to focus on just one variable: the interest rate and most Mortgage broker focus on that. However, to make sure you’re getting the best deal on a mortgage, you’ll want to take a deeper look at both the offer and the lender behind it.
The APR: What’s in a Number?
When comparing rates, you can’t simply rely on the annual percentage rate (APR) as the indicator of how much the mortgage will cost you.
Theoretically, the APR is supposed to reflect all the costs associated with a loan and make it simple to compare offers from different institutions. Unfortunately, lenders have a lot of flexibility in deciding which fees to include when calculating the APR. That means it’s easy for some to conveniently omit a few charges and make their APR look lower than competitors.
For a deeper dive into the expenses, ask to see the Mortgage broker‘s loan estimate, formerly known as a good faith estimate. It’s an itemized list of all the fees they’ll charge you, including those that may have been factored into the APR calculation.
How Long Does the Rate Last?
There are two basic types of mortgages: fixed rate and adjustable rate. As the names imply, a fixed-rate mortgage locks in your interest rate for the life of the loan, while the interest on an adjustable-rate mortgage (ARM) is normally fixed for a limited amount of years, … [Read the rest]