When considering obtaining a home or mortgage loan, shopping for the best rates will ensure customers get the best deal. A mortgage, regardless of whether it be for the purchase of a new home, a home equity loan, or a refinance loan, should be considered a product, similar to an automobile, so the terms and prices are possibly negotiable. All costs accrued in securing a mortgage should be compared. Taking the time to shop, compare, and negotiate across the best mortgages available may save a substantial amount of money.
There are several lending institutions that offer different types of home loans. Banks, credit unions, mortgage companies, and thrift institutions all may offer different prices, so it is necessary to contact several different lenders in order to secure the best price. Mortgage brokers also offer home loans. Broker’s do not directly lend money. Instead, they find their customers a lender and then arrange the transactions involved in securing a mortgage. Brokers have access to many lenders, which means they can offer a bigger selection of products and terms for their customers to choose from. A broker will usually contact a wide variety of lenders in reference to a customer’s application, but they are under no obligation to secure the best deal until a customer has put them under contract. Because of this, it may be a good idea for borrowers to contact a few brokers much as they would do with thrift institutions and banks.
It is important that customers collect all the necessary mortgage information from various brokers and lenders. Borrowers should be aware of what they can offer as a down payment. They also need to know not only the payment and the interest rate, but also the terms of the loan, and the kind of loan. Having all this information allows the customer to compare offerings between all institutions.
Potential borrowers should not assume that past credit history automatically negates their chances of securing a low interest rate. If a borrower can show good reason to be trusted to repay their loan, they may be able to secure a lower rate. If they cannot show just cause for a lower rate, they may be charged higher interest.