Compare Mortgage Quote
"Compare Mortgage Quote for the Lowest Rates and Fees."
When refinancing or buying a house, to compare a mortgage quote is the most important thing you can do. Although lenders like E-LOAN often offer among the best terms in the industry, it's not always wise to put all your eggs in one basket. That's why one of the best places to compare mortgage quote is America's Lending Partners.
Most people already know this. What most people don't know is the right way to compare mortgage quote. A mistake here can cost a borrower thousands of dollars in fees and interest payments.What is the right way to compare mortgage quote?
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How To Compare Mortgage Quote
Mistake #1: When is a low interest rate not a low interest rate?
Whether it's online or over the phone, most people make a big mistake when shopping and comparing mortgages. Most people will look for or ask what the interest rate is on a potential mortgage.
Why is this a mistake? After all, people are always looking for the best deal and don't want to pay too much. Unfortunately, people make the assumption that interest rate is the only cost associated with obtaining a mortgage. Comparing two or more mortgage companies on the basis of interest rate alone is like comparing two people based on weight - both a professional, muscle-bound linebacker weighs the same as an overweight couch potato. In other words, in order to make a valid comparison, you have to dig a little deeper as to why the numbers are as they appear.
Sometimes, you might call a lender to ask for a rate quote, and their answer will be "It depends. I can let you know after an application." This can mean one of two things. One, the lender might be trying to hide a high interest rate and doesn't want to scare you off before you apply. Two, the lender is telling the truth and doesn't know what your actual rate might be until your entire credit history is examined.
Interest rates vary. In order to understand how much you're charged, you must first understand the concept of the "par" rate. Periodically, usually every day, week or month, mortgage lenders are given the latest interest rates to be charged to the borrower. There is an interest rate called "par" that is the starting point for what you're charged. Par refers to a "break-even" rate. It's the interest rate charged by the lender when there are no points charged on the loan. Other factors go into the par rate, but for the sake of simplicity, suffice it to say that all rates start at par.
Why is this a mistake? After all, people are always looking for the best deal and don't want to pay too much. Unfortunately, people make the assumption that interest rate is the only cost associated with obtaining a mortgage. Comparing two or more mortgage companies on the basis of interest rate alone is like comparing two people based on weight - both a professional, muscle-bound linebacker weighs the same as an overweight couch potato. In other words, in order to make a valid comparison, you have to dig a little deeper as to why the numbers are as they appear.
Sometimes, you might call a lender to ask for a rate quote, and their answer will be "It depends. I can let you know after an application." This can mean one of two things. One, the lender might be trying to hide a high interest rate and doesn't want to scare you off before you apply. Two, the lender is telling the truth and doesn't know what your actual rate might be until your entire credit history is examined.
Interest rates vary. In order to understand how much you're charged, you must first understand the concept of the "par" rate. Periodically, usually every day, week or month, mortgage lenders are given the latest interest rates to be charged to the borrower. There is an interest rate called "par" that is the starting point for what you're charged. Par refers to a "break-even" rate. It's the interest rate charged by the lender when there are no points charged on the loan. Other factors go into the par rate, but for the sake of simplicity, suffice it to say that all rates start at par.
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Helpful Links To Compare Mortgage Quote
- E-LOAN
- E-LOAN is one of the best places online to get a mortgage quote. They are the #1 Online Lender in 2006. When you compare mortgage quote, be sure that E-LOAN is one of the lenders you apply to.
- America's Lending Partners
- America's Lending Partners is one of the best places to compare mortgage quote. They are very respected and have a great reputation in the industry. Up to four different lenders compete for your business, absolutely Free. Submit an application today -- you have nothing to lose, except hundreds of dollars off your payment!
Compare Mortgage Quote Videos
Mortgage-Backed Securities I
Part I of the introduction to mortgage-backed securities
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Compare Mortgage Quote List
What Factors Go Into Your Interest Rate?
This list is not exhaustive, but it gives you an idea of what happens behind the scenes. When shopping for a mortgage, be sure to compare these rate-changing factors between lenders. Then you will have a true idea of the cost of your loan, instead of relying on the interest rate alone. The rate is merely an illusion that's hiding something else underneath.
- Amount of the money you're borrowing. Many lenders use a graduated scale to determine what your rate is based on how much they're loaning you. If the loan is under $75,000, for example, you might be charged 1% above par. The rate goes down as the loan amount goes up, eventually reaching par when a target range is set. For some lenders, that target might be $150k to $250k. In other words, you're not charged a loan amount adjustment rate if your loan falls within this range. Above this range, the rate might go down, depending on the lender.
- Amount of points you're being charged. Many people have heard of the term "points" when it comes to obtaining a mortgage, yet few understand what it is. One point equals one percent of your loan amount. For example, a $150,000 mortgage with 1 point is $1,500. Points represent "prepaid" interest. Instead of you paying a higher rate throughout the life of the loan, you can pay some of that interest up-front in a lump sum. This is also known as "buying down the rate." The more points you pay, the lower your interest rate. Points are paid either out of your pocket or out of the proceeds of your loan.
- Amount of "back-end" points you're being charged. Many lenders, especially mortgage brokers, earn points that are not directly charged to you. You won't pay back-end points out of your pocket. However, when you are charged points on the back-end, your interest rate will go up. You won't always know when this charge is being levied against you because the lender won't tell you about it.
- Prepayment penalties. In states that allow a prepayment penalty charge, you will likely have such a penalty included with your mortgage. If you refinance or otherwise pay your mortgage off within a certain time frame, usually within 5 years, you will incur a penalty and it will be tacked on to your payoff amount. If you know that you might move homes or refinance before your prepayment penalty is up, you can opt for a mortgage without a prepayment penalty. However, you will pay for this option with a higher rate. As a compromise, you can take a smaller prepayment period, maybe 2 or 3 years, and the interest rate hike won't be as dramatic. If you live in a state that does not allow prepayment penalties, this doesn't apply to you.
by renegadelender
Lee Rivera, aka "The Renegade Lender," is a former mortgage company loan officer, manager, and vice president.
Lee has seen the dark side of lending f...
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