How to Compare Mortgage

1. How to Compare Mortgage There are numerous types of mortgages and mortgage lenders available in the market today, creating the need to compare mortgages. When buying a home, most people focus solely on the interest rate. However, there are more factors to consider other than the interest rate. While shopping for a mortgage, you will note different lenders have significant price differences. Therefore, you need to compare mortgages to look out for yourself and ensure you get the best offer. What to Compare Some of the comparison factors you should consider are; 1. The type of monthly payments You need to decide which type of monthly payment would suit you best. For example, would you like a variable or a fixed-rate mortgage? A variable mortgage implies the amount you pay for the mortgage every month can change depending on the prevailing interest rate. Thus, you can either pay less or more than the previous month. In contrast, a fixed rate means you will be obliged to pay a predetermined amount each month until you finish paying off your mortgage. Usually, fixed mortgages are paid off for less than five years. 2. The fixed term Most mortgage lenders offer an introductory rate over a certain number of years. On the lapse of these years, they charge the standard variable interest rate, which tends to be higher. Therefore, if you need to remortgage after some years, you will incur an early repayment charge, which will be pretty costly. The best term for you depends on your needs. For example, if you plan to move in a few years, choosing an extended fixed-term mortgage may not be ideal. Although short fixed-term mortgages may be slightly costly, you save more by not dealing with excessive early repayment charges in the long run. 3. Flexibility to remortgage Re-mortgaging your current choice for a better one in the future can save you lots of money. However, mortgage lenders charge an exit fee which you will pay as you remortgage.

2. If you want to enjoy the flexibility to remortgage when you need to, you should find a mortgage with little or no exit fees. 4. An option to take a payment break, overpay or underpay? As a borrower, you have limited control over the length of the mortgage your lender offers you. The limited control is because the mortgage depends on the buying price of the property, your down payment, and the amount of monthly repayment you can afford. However, if somewhere along the way your job works out and you can make overpayments, you will save a lot more. Unfortunately, not all mortgages have the option to overpay, while those that do have a set maximum limit for overpayments. Some mortgages also can allow you to underpay or take a short mortgage break where you don’t make any payment. If these features appeal to you, you should consider choosing a mortgage that allows these conditions. Using Rate Comparison Table on Websites Most lenders have a mortgage rate comparison table to give you an idea of their products, rates, and expected monthly payments. While the rate tables may seem challenging to understand, they are a valuable comparison tool that you can use for comparison. Here is how you can compare mortgages using the rate comparison table. Before beginning your comparison using the tables, you need to know that the tables may differ from website to website. The difference is because various lenders offer various types of mortgage, fees, and different terms. Additionally, you need to be aware that interest rates vary according to external factors like economic growth, inflation, and the state of housing. Therefore, the figure you get today can be different from the figure you get after some days. While lenders use no standard method when displaying the rates, most calculators use the same information to calculate the expected payment. So, there is no significant discrepancy in the factors considered. However, most times, the figures displayed on the website calculator are not what you qualify for. Therefore, rather than relying on the comparison tables, you should consider a consultation with the lender for a more accurate figure. Get Mortgage Quotes As you compare mortgages, it is essential to get as many mortgage quotes as you can. It will help you sift through the numerous lenders in the market, get a good deal and increase your ability to save. As tempting as it may be to stop comparing mortgages as soon as you find a desirable offer, don’t. Instead, you can use the offer as leverage and see if you will have a better deal from a different lender. Sometimes, you might get a lender with the same fee but better rates. Does Comparing Mortgage Hurt a Credit Score?

3. No, it doesn’t. Therefore, there is no reason to shy away from comparing mortgages. Lenders consider mortgage a soft inquiry, and thus, it does not affect your credit score in any way. Take Away Comparing mortgages takes a lot of work. However, it is highly rewarding as the best deal saves you hundreds of dollars. Remember the factors to compare other than the interest rate. Since comparing mortgages doesn’t hurt your credit score, don’t shy away from relentlessly doing it. Good luck!