Real Estate Agent  Keep in mind

There is more to a mortgage than shopping for the lowest interest rate. Don't be tempted to shop on interest rate alone. You may end up paying more money. Be sure to compare loan terms.

Shopping for a mortgage is not an easy job, but it is an inescapable part of the home buying process. By now, you may have done some preliminary research as to the current interest rates, and gone through the process of pre-qualifying for a loan before you start house hunting. If you also requested a credit report and resolved any problems in your credit record, or if you assembled documentation on your non-traditional credit history, you can now shop for a mortgage with confidence.

Getting started

Your challenge, however, is to select a loan with terms that are most favorable to your situation. For example, if you anticipate that you will be living for 10 years in the house you are buying now, the interest rate may be your primary consideration. If you anticipate keeping the house for only 2 or 3 years, the closing costs and whether there is a pre-payment penalty (a charge for repaying the loan early) may be more important to you.

By the time you have signed a sales contract, you should have a clear idea of what kind of financing you will need. Shop around for the lender that offers the best terms. You may be surprised at the range of interest rates quoted, as well as the considerable variation in the fees charged by lenders for origination and processing a loan application. Even if you have already been pre-qualified by a lender, you should satisfy yourself that the rates and loan terms offered by that lender compare favorably with those of other lenders. It's definitely worth your time to shop around.

Mortgages are available from a number of sources including:

  • Savings and loan associations
  • Commercial banks
  • Mortgage companies
  • Federal credit unions
  • Financial companies

Where to look

You might do well to start your search for a mortgage with the bank where you have your personal checking or savings accounts. Call them up and ask whether they offer home mortgages, and if so, whether they grant favorable terms to their own account holders. If you are a member of a federal credit union, you should investigate whether the credit union also makes home loans.

Your real estate professional may be quite knowledgeable about which lenders in your area offer the best terms. And if your friends and co-workers have bought homes recently, by all means find out where they got their mortgages.

Look also in the real estate section of your local paper. Many city papers run comparative mortgage rate charts each week, and there may even be a mortgage rate hotline in your area. For additional sources, look in the Yellow Pages under mortgages.

Shopping by telephone
To begin with, plan to contact six or more lenders of different types that offer home mortgages in your area.

Shopping via the internet
Many lenders have websites allowing borrowers to shop for mortgages online. In addition, mortgage brokers' sites may allow you to choose from a number of lenders.

It is important to remember that filling out a loan application — online or otherwise — is a serious step. We strongly recommend that you avoid making multiple applications to "test the market" until you know you are really ready to buy. Why? Unfortunately, some borrowers have made many applications for mortgages over an extended period of time (months) and have found that doing this has had a negative effect on their credit score, reducing the amount of money a lender would let them borrow when they actually needed it.

Local. Experienced.

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Determining Your Price Range Determining Your Price Range How much home can you afford? There are more factors involved than just comparing your paychecks to your expenses.

Prequalifying for a Home Mortgage Prequalifying for a Home Mortgage The first step in the home search is home financing. Getting pre-qualified for a mortgage loan is necessary in today's market.

More Home for Your Money More Home for Your Money There are creative ways to make your money work for you when buying a home, and a little research can go a long way.

Deciding What You Really Want Deciding What You Really Want There are some simple things to consider before you start calling Realtors, and your final choices may surprise you.

Finding <em>Who</em> Finds Your Home Finding Who Finds Your Home Working with one real estate agent who has your confidence is better than stringing along several who question whether you are serious.

What to Look For When Looking What to Look For When Looking Not all homes are created equal. There are ways to assess the quality of a home in the same way appraisers look at homes.

Shopping for a Home Loan Shopping for a Home Loan With so many lenders advertising mortgage rates in Florida, how do you know which ones are good, and which ones are teasers?

Comparing Loan Terms Comparing Loan Terms So how do you know which mortgage offer is the one for you? Hint: take a look at more than just the interest rate.

Applying for the Loan Applying for a Home Loan You have the information the bank wants, but do you know how to present it to them in a way that will get you approved for the mortgage?

Mortgage Loan Processing Mortgage Loan Processing What is happening behind the scenes after you submit your application? A lot. Here's an inside look from the lender's perspective.

If Your Application is Rejected If Your Application is Rejected Getting turned down is not the end of the world, and it doesn't mean you have to give up looking. It just means you need a little help.

Negotiating the Purchase Price Negotiating the Purchase Price How do you negotiate the purchase price when you do find the right house? Hint: it's really more than about the price.

Contingencies in the Offer Contingencies in the Offer You've made the offer on a home, and now it feels like a tug-of-war. How do you move forward, and how do you get out of a bad deal?

Preparing for the Closing Preparing for the Closing What comes next, who does it, and how do you know it's being done in time? Preventing surprises at closing, and protecting your interests.

As Closing Day Approaches As Closing Day Approaches In the final weeks before your closing, there will be the title search, the survey of the property, and your final walk-though inspection.

The Day of Closing The Day of Closing The day of closing is finally here. So what you can expect? Here is an explanation of the documents and the closing costs you may encounter.