Finding the Best Consumer Mortgage

One of the most important things you will do when buying a home is choosing the right lender.

Loan Review Home Mortgage Lenders Page can help you find the right Home Loan Lender

Home Loans and Consumer Mortgages Reviewed

Shopping around for a Home Loan or Consumer Mortgage will help you to get the best financing deal. A Consumer Mortgage, whether it's a home purchase, home refinancing, or a home equity loan - is a product, just like a car, so the price and terms may be negotiable. You'll want to compare all the costs involved in obtaining a Consumer Mortgage. Shopping, comparing, and negotiating may save you thousands of dollars.

Obtain Information from Several Consumer Mortgage Lenders:

Home Loans, and Consumer Mortgages are available from several types of lenders, Thrift Institutions, Commercial Banks, Consumer Mortgage Companies, and Credit Unions. Different Consumer Mortgage Lenders may quote you different prices, so you should contact several Mortgage Lenders to make sure you're getting the best price. You can also get a Home Loan through a Consumer Mortgage Broker. Mortgage Brokers arrange transactions rather than lending money directly; in other words, they find a Consumer Mortgage Lender for you. A Mortgage Broker's access to several Mortgage Lenders can mean a wider selection of loan products and terms from which you can choose. Mortgage Brokers will generally contact several Mortgage Lenders regarding your application, but they are not obligated to find the best deal for you unless they have contracted with you to act as your agent. Consequently, you should consider contacting more than one Mortgage Broker, just as you should with banks or thrift institutions.

Whether you are dealing with a Consumer Mortgage Lender directly, or a Mortgage Broker may not always be clear. Some financial institutions operate as both Mortgage Lenders and Mortgage Brokers. And most Mortgage Brokers' advertisements do not use the word "Broker" Therefore, be sure to ask whether a Mortgage Broker is involved. This information is important because Mortgage Brokers are usually paid a fee for their services that may be separate from and in addition to the Mortgage Lender's origination or other fees. A Mortgage Broker's compensation may be in the form of "points" paid at closing or as an add-on to the interest rate of your Mortgage, or both. You should ask each Mortgage Broker you work with how he or she will be compensated so that you can compare the different fees. Be prepared to negotiate with the Mortgage Brokers as well as the Consumer Mortgage Lenders.

Obtain All Important Cost Information:

Be sure to get information about Consumer Mortgages from several Mortgage Lenders or Mortgage Brokers. Know how much of a down payment you can afford, and find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. Ask for information about the same loan amount, loan term, and type of loan so that you can compare the information. The following information is important to get from each Consumer Mortgage Lender and Mortgage Broker:

Mortgage Rates

Ask each Mortgage Lender and Broker for a list of its current Mortgage Interest Rates and whether the rates being quoted are the lowest for that day or week.

Ask whether the rate is fixed or adjustable. Keep in mind that when interest rates for adjustable-rate loans go up, generally so does the monthly payment.

If the rate quoted is for an Adjustable-Rate Mortgage, ask how your rate and Mortgage payment will vary, including whether your Mortgage payment will be reduced when rates go down.

Ask about the Mortgage's Annual Percentage Rate (APR). The APR takes into account not only the interest rate but also points, Mortgage Broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate.

Consumer Mortgage Points

Points are fees paid to the Mortgage Lender or Broker for the Loan and are often linked to the interest rate; usually the more points you pay, the lower the rate.

Check your local newspaper for information about rates and points currently being offered.

Ask your Consumer Mortgage Lender, or Mortgage Broker to quote points to you as a dollar amount—rather than just as the number of points—so that you will actually know how much you will have to pay.

Consumer Mortgage Fees

A Consumer Mortgage often involves many fees, such as loan origination or underwriting fees, Mortgage Broker fees, and transaction, settlement, and closing costs. Every Mortgage Lender or Broker should be able to give you an estimate of its fees. Many of these mortgage fees are negotiable. Some fees are paid when you apply for a Mortgage (such as application and appraisal fees), and others are paid at the Mortgage closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your Mortgage Loan amount and total costs. "No cost" Mortgages are sometimes available, but they usually involve higher rates.

Ask what each fee includes. Several items may be lumped into one fee.

Ask for an explanation of any fee you do not understand. Some common fees associated with a Consumer Mortgage closing are listed on this page, and on the Consumer Mortgage Lenders page.

Down Payments and Private Mortgage Insurance:

Some Consumer Mortgage Lenders require 20 percent of the home's purchase price as a down payment. However, many Mortgage Lenders now offer loans that require less than 20 percent down—sometimes as little as 5 percent on conventional Mortgages. If a 20 percent down payment is not made, Mortgage Lenders usually require the home buyer to purchase Private Mortgage Insurance (PMI), to protect the Mortgage Lender in case the home buyer fails to pay. When government-assisted programs such as FHA (Federal Housing Administration), VA (Veterans Administration), or Rural Development Services are available, the down payment requirements may be substantially smaller.

Ask about the Consumer Mortgage Lender's requirements for a down payment, including what you need to do to verify that funds for your down payment are available.
Ask your Mortgage Lender about special programs it may offer.

If PMI is required for your Consumer Mortgage:

Ask what the total cost of the insurance will be.
Ask how much your monthly payment will be when including the PMI premium.
Ask how long you will be required to carry PMI.

Obtain the Best Mortgage Deal That You Can:

Once you know what each Mortgage Lender has to offer, negotiate for the best deal that you can. On any given day, Consumer Mortgage Lenders and Mortgage Brokers may offer different prices for the same loan terms to different consumers, even if those consumers have the same loan qualifications. The most likely reason for this difference in price is that loan officers and Mortgage Brokers are often allowed to keep some or all of this difference as extra compensation. Generally, the difference between the lowest available price for a Consumer Mortgage and any higher price that the borrower agrees to pay is an overage. When overages occur, they are built into the prices quoted to consumers. They can occur in both fixed and variable-rate Mortgages and can be in the form of points, fees, or the interest rate. Whether quoted to you by a loan officer or a Mortgage Broker, the price of any loan may contain overages.

Have the Consumer Mortgage Lender or Mortgage Broker write down all the costs associated with the loan. Then ask if the Mortgage Lender or Broker will waive or reduce one or more of its fees or agree to a lower rate or fewer points. You'll want to make sure that the Mortgage Lender or Mortgage Broker is not agreeing to lower one fee while raising another or to lower the rate while raising points. There's no harm in asking Consumer Lenders or Mortgage Brokers if they can give better terms than the original ones they quoted, or than those you have found elsewhere.

Once you are satisfied with the terms you have negotiated, you may want to obtain a written lock-in from the Mortgage Lender or Broker. The lock-in should include your Consumer Mortgages interest rate that you have agreed upon, the period the lock-in lasts, and the number of points to be paid. A fee may be charged for locking in the Mortgage rate. This fee may be refundable at closing. Lock-ins can protect you from Mortgage rate increases while your loan is being processed; if rates fall, however, you could end up with a less favorable rate. Should that happen, try to negotiate a compromise with the Mortgage Lender or Mortgage Broker.

Consumer Mortgage - Remember: Shop, Compare, Negotiate :

When buying a home, remember to shop around, to compare Mortgage costs and terms, and to negotiate for the best deal. Your local newspaper and the Internet are good places to start shopping for a Consumer Mortgage. You can usually find information both on Mortgage interest rates and on points for several Consumer Mortgage Lenders. Since rates and points can change daily, you'll want to check your newspaper often when shopping for a Home Mortgage. But the newspaper does not list the fees, so be sure to ask the Mortgage Lenders about them.

Fair Lending Is Required by Law:

The Equal Credit Opportunity Act prohibits Mortgage Lenders from discriminating against credit applicants in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, age, whether all or part of the applicant's income comes from a public assistance program, or whether the applicant has in good faith exercised a right under the Consumer Credit Protection Act.

The Fair Housing Act prohibits discrimination in residential real estate transactions on the basis of race, color, religion, sex, handicap, familial status, or national origin.

Under these laws, a consumer cannot be refused a Mortgage based on these characteristics nor be charged more for a Mortgage or offered less favorable terms based on such characteristics.

Credit Problems? Still Shop, Compare, and Negotiate for Your Consumer Mortgage:

Don't assume that minor credit problems or difficulties stemming from unique circumstances, such as illness or temporary loss of income, will limit your Mortgage choices to only high-cost Consumer Mortgage Lenders.

If your credit report contains negative information that is accurate, but there are good reasons for trusting you to repay a Mortgage, be sure to explain your situation to the Mortgage Lender or Broker. If your credit problems cannot be explained, you will probably have to pay more than borrowers who have good credit histories. But don't assume that the only way to get a Consumer Mortgage is to pay a high price. Ask how your past credit history affects the price of your Mortgage and what you would need to do to get a better price. Take the time to shop around and negotiate the best deal that you can.