Home - Mortgage Loans | Personal Loans | Bad Debt Loans | Foreclosure Loans
Apply for a Loan | Best Auto Loans | Best Bad Credit Auto Loans | Best Bad Credit Loans | Best Bill Consolidation Loans | Best Cash Advance Loans | Best Credit Cards | Best Credit Repair Tips | Best Debt Consolidation Loans | Best Free Credit Reporting Tips | Best Home Equity Loans | Best Mortgage Loans | Best Pay Day Loans | Best Personal Loans | Best Products on the Internet | Best Unsecured Loans
Great Financial Advice
Apply for a Loan
Latest Financial News
Rate Lock Advisory
Best Products
Join Our Mailing List
Contact Us
Loan Articles Index
Auto Loans
Bad Credit Auto Loans
Bad Credit Loans
Bill Consolidation Loans
Cash Advance Loans
Credit Cards
Credit Repair Tips
Debt Consolidation Loans
Debt Reduction Loans
Foreclosure Loans
Free Credit Reporting Tips
High Risk Loans
Home Equity Loans
Home Loans
Lawsuit Loans
Mortgage Loans
Pay Day Loans
Personal Loans
Products on the Internet
Real Estate Services
UK loans
Unsecured Loans
Loan Article Index
Loan Articles A-G
Loan Articles H-Q
Loan Articles R-Z
Mortgage Calculators
Mortgage Calculator
Mortgage Amortization Calculator
Rent vs. Buy Calculator
How Much Can I Afford Calculator
Auto Payment Calculator
Click here to Sign up for Email and Newsletter

 

redhotloantips fat loss


How to Compare Loans Amongst Different Lenders

Written by: Martin Lukac

Comparing loans of different lenders is often the most difficult part of mortgage shopping.Firstly, it is important to keep in mind that mortgage packages consist of more than interest rates. They consist of a quoted rate, points and closing costs. Points are an up-front fee paid to the lender at closing. Each point equals one percent of the loan amount. Points are charged, or paid, to lower or increase the rate on the loan. Most lenders will allow you to choose amongst a variety of rate and point combinations for the same loan product. Therefore, when comparing rates of different lenders, make sure you compare also the associated points. Closing costs typically consist of loan related fees, title and escrow charges, government recording and transfer charges and can add thousands of dollars to the cost of your loan. When comparing lenders it is important to compare loan related fees (i.e. the fees which lenders charge to process, approve and make the mortgage loan), since the other fees are typically independent of the lender.

Secondly, when comparing loans of different lenders you need to thoroughly investigate and compare all loan features: maximum LTV, mortgage insurance payments (if any), credit and cash reserve requirements, qualifying ratios, etc. Pay special attention to the presence of prepayment penalties and the availability and terms of conversion options (such as rate reduction option, or option to convert an ARM to a fixed-rate mortgage).

Thirdly, for each loan you are comparing find out the lock-in period, during which the interest rate and points quoted to you will be guaranteed. Lock-ins of 30, 45 and 60 days are common. Some lenders may offer a lock-in for only a short period of time (15 days, for example). Usually, the longer the lock-in period, the higher the price of loan. The lock-in period should be long enough to allow for settlement before lock-in expires.

Finally, make sure that you are comparing the interest rates on the same day. Rates change daily, if not a couple of times a day. So, what is the best way to compare loans among different lenders? First of all when you compare different lenders you should compare loan products of the same type (e.g. 30 yr. fixed). It does not make sense to compare different types of loan programs (e.g. 30 yr fixed vs. 15 yr fixed, or fixed vs. adjustable).

To compare loan products of the same type among different lenders:

1. Fix all lenders at one interest rate and lock-in period.

You have to compare different lenders on the same rate (e.g. 7.5%) and lock-in period, otherwise you will be comparing apples and oranges. Most lenders can offer you a variety of rate and point combinations for the same loan product and allow you to choose the lock-in period.

2. Add up the total lender fees for that rate including points and loan related fees.

There are a number of different fees paid in connection with loan, and some lenders have different names for them. One lender might offer to waive one fee and then add another one. So when comparing loans of different lenders you should look at the total sum of ALL loan related fees. These fees can include processing and underwriting fee, mortgage insurance premium, appraisal fee, the cost of a credit report, tax service fee, application, commitment, wire transfer fee, etc. Points can include discount and origination points and have to be converted into dollar amounts.

3. The lender that has lower lender fees has a cheaper loan than the lender with higher fees. Example: For a loan amount of 100,000 on a 30 yr fixed rate mortgage, lender A is offering you a rate of 7.375% with 0 points, 7.25% with 0.5 points, and 7.125% with 1 points. He also charges $450 in loan related fees. Lender B offers you 7.25% on the same loan with 0.375 points, 7.125% with 0.875 points, and 7% with 1.375 points and charges $680 in loan related fees. Both lenders are quoting rates on a 45 day lock.


About the Author

#1 Loans USA (1LoansUSA.com) offers variety of mortgage information. Mortgage rates for any loan program from various lenders, mortgage rate predictions, bond rates, CD rates and more.


Other Related Articles:

New Home Construction Loans 101
When you are ready to build your first home or that dream home that you have been wanting for so long you will probably wind up needing help with the financial part of the building process. The funding for your new home is available through new...read more

Reasons Why a UK Personal Loan Might Be a Good Idea For You
When people look at their financial portfolio many do not consider loans as a wise option. This is because people see the principal plus the interest and automatically assume that alone is a bad decision. That is not always the case. When...read more

How to Qualify for a Home Mortgage Loan
Are you considering applying for a mortgage loan to purchase your first home? If so, you should read the following tips below that will make the process easier! If You Have a Good Credit History It Is Easier To Qualify For a...read more


Return to Home

468x60

Best Auto Loans, Best Bad Credit Auto Loans, Best Bad Credit Loans, Best Bill Consolidation Loans, Best Cash Advance Loans, Best Credit Cards, Best Credit Repair Tips, Best Debt Consolidation Loans, Best Debt Reduction Loans, Best Foreclosure Loans, Best Free Credit Reporting Tips, Best High Risk Loans, Best Home Equity Loans, Best Home Loans, Best Lawsuit Loans, Best Mortgage Loans, Best Pay Day Loans, Best Personal Loans, Best Products on the Internet, Best Real Estate Services, Best UK loans, Best Unsecured Loans
Subscribe to Mailing List | Private Policy | Unsubscribe | Site Map