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Tips When Comparing Mortgage Rates and Securing a Home Mortgage Loan
 

Tips When Comparing Mortgage Rates and Securing a Home Mortgage Loan

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Have you saved up a down payment and are ready to buy the home you always wanted but are unsure how much house you can afford and what the next steps are? Don't worry, you're not alone. The excitement of home ownership can be outweighed by the anxiety of getting a mortgage loan, searching for a home and pulling the trigger on buying a home. 

Before you go ahead with the process of pre-qualifying for a mortgage the first step you should take is review your monthly income and expenses to estimate what you can afford to pay for a home. This of course includes the monthly mortgage payment, property taxes and insurance. 

Be prudent and plan ahead to be sure you will be able to afford your monthly payments for several years to come. Before buying a home try to have an emergency savings account with at least 6 months of expenses saved up just in case you or a spouse loses a job. Current savings account rates and CD rates are not that high but at least your money is insured by the FDIC.

I realize that saving for a down payment for a home these days requires you to more than likely save 20% of the purchase price of the home. Also saving 6 months of living expenses can push the purchase date of a home a year or two out. Imaging buying a home but having no money in the bank. This is referred too as being house poor. The last thing you want to do it buy a home, lose a job and lose a home because you don't have an emergency fund.

Once you have a down payment and an savings account with your 6 months of living expenses check your credit report and see here you stand on your credit score. If you searched and compared mortgage rates recently you probably have seen 30 year mortgage rates as low as 3.75%.

These rates are advertised rates by mortgage lenders for borrowers with excellent credit. If you have less then excellent credit you won't get a 30 year mortgage rate at 3.75%. Basically the higher your credit score the lower the mortgage rate you will receive on your home loan.  

Shop around and compare mortgage rates current from many different lenders. Yes, shopping around takes time and energy, but not shopping around can cost you tens of thousands of dollars or hundreds of thousands of dollars if you lock in a higher mortgage rate.

There are many different ways you can comparison shop for the best mortgage rates today. You can check on current mortgage rates from direct lenders or mortgage brokers. A direct lender is a bank, credit union or mortgage lender who lends you money. A mortgage broker is different and is arranges mortgage loans with a mortgage  lender rather than lending money directly.

Mortgage brokers actually sell you a loan from a lender. Unfortunately mortgage lenders or mortgage brokers have your best interest in mind. They are not required  to find the best mortgage loan or mortgage rate for you.

Finding today's mortgage rates that are the best and finding the best fit on a mortgage loan is up too you. You can to do the leg work and shop for the best rate and fit.

Besides comparing today's mortgage rates and which mortgage type is best for you there are other expenses to consider. Many mortgagees accept the first mortgage loan offered them and don't realize that they may be able to get a better mortgage. Current mortgage rates change daily, mortgage lenders and mortgage brokers may offer different mortgage rates and mortgages fees to different mortgagees for the same loan.

This can happen even with both mortgagees have the same loan qualifications and credit history. Another driving factor for mortgage lenders and mortgage brokers are the money they make by closing on a loan with you. The best way to avoid being taken advantage of is to understand what your doing and shopping around for the lowest mortgage rates currently available.  

There are many different types of mortgage loans and features to each type of loan including a different mortgage rate. There are adjustable mortgage rates, fixed mortgage rates and interest-only mortgage rates. Having a good and through understanding of each type of loan, knowing the benefits and risks of each type will help you save money.

The most common type of mortgage loans are fixed rate mortgage loans. With a fixed rate mortgage your monthly mortgage payments stay the same for the entire life of the loan. Outside of taxes and insurance your mortgage payment stays the same.

If you decide on an adjustable rate mortgage or interest only mortgage you monthly payments can change every month. This makes budgeting harder and many homeowners lost their homes when their mortgage payments increased.

When shopping for a mortgage cconsider all mortgage features, the mortgage rate, the annual percentage rate, is the loan a fixed rate or adjustable rate loan and what are the settlement costs.

You can use a mortgage calculator and an amortization schedule to figure out what type of mortgage is best for you. Failure to do so can cost you a ton of money in the long run and possibly cost you the home you just bought..

Buying a home and getting a mortgage loan is one of the most expensive and complex purchases most people ever make. Don't be affaird to ask for help. Talk to someone you can trust and do your homework to have an understanding of what you're getting into before you get into it!

Author: Robert Till
October 16th, 2011