How to Compare Mortgage Terms
Mortgage terms vary from lender to lender. The same borrower could receive different interest rate offers from various lenders. Other mortgage terms such as closing costs also differ from lender to lender.
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Down Payment
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Some lenders require a full 20 percent down payment to obtain a mortgage. Others only require five percent down. The Federal Housing Administration (FHA), a government assisted program, often requires smaller down payments, states the Federal Reserve Board.
Points
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Lenders often require borrowers to pay points on mortgages. These points are based on the loan amount, but link to the interest rate. Often, paying more points lowers the interest rate, according to the Federal Reserve Board. Since some lenders require more points at closing, people with less cash available for closing costs sometimes opt for lenders requiring fewer points
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Extra Fees
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Some lenders charge origination, settlement, transaction and underwriting fees. These include the title abstract and examination, application fees, title insurance, attorney and notary fees, property survey and recording fees, credit report and appraisal fees. Some lenders itemize the estimations while others lump the entire sum together. Since they can waive or minimize some of the fees, have each lender itemize them for better comparison.
Negotiations
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Borrowers, even those with less than average credit, should negotiate their loan terms once they compare lenders. Lenders build in some overage and wiggle room into their loans, according to the Federal Reserve Board.
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