Look beyond the mortgage rate when shopping lenders

What is a mortgage loan rate?

Rate or interest is simply a percentage of the loan a lender charges to borrow money. This figure is beneficial to know so you can compare the cost of different lenders.

To make the comparison easier, lenders must also inform you about how that interest rate will affect your payments over an entire year. This interest is known as the Annual Percentage Rate or APR, and it also includes any fees or additional costs associated with the loan.

Lower isn’t always better

Even though a financial institution states that they offer favorable rates, and another may be slightly higher, it does not mean that the lower rate is necessarily the better deal.

There could be many things such as assumptions, added fees, short-term promotional periods, points, pre-payment penalties and higher closing fees, which can make a good deal not as attractive as what other banks may have offered.

Multiple home loan products

Before choosing the right home loan product, buyers should know the different loan products offered.

Learning the differences between a fixed or adjustable-rate mortgage (ARM) will help you decide which option is best for your budget.

Also, take the time to look at closing costs, as financial institutions differ on what they charge for fees and rate buy-downs.

Find the right lender

The right mortgage lender is helpful in a loan transaction as well.

Maintaining constant communication with your lender proves beneficial during the loan process. You also want to choose a lender who is knowledgeable about the products they offer and can serve as an “advisor” during the loan process.

Ultimately, those buying a home need to find the right lender and realtor that you are comfortable working with to purchase your dream house.

Ryan Ludy is assistant vice president/mortgage loan originator at Prevail Bank and a member of the Chippewa Valley Home Builders Association. Blog posts are often submitted by association members. For free resources on building or remodeling, homeowners can contact the CVHBA by calling 715-835-2526 or email info@cvhomebuilders.com.

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