How to Compare Mortgage Companies

When you decide to purchase a home, refinance the mortgage on your current home or take out a home equity loan, you will want to make sure you get the best deal possible. The fact is each mortgage company is different and each may quote you an entirely different price. Therefore, you will want to take the necessary steps as you compare mortgage companies to ensure you get the best price possible on your loan.

Instructions

1. Ask friends and relatives for any mortgage companies they can recommend to you.

2. Look in the local newspaper to find any mortgage companies offering special programs.

3. Conduct a search on the Internet to find any special programs that mortgage companies have that my apply to you.

4. Contact at least 3 of the mortgage companies you found in your search to get the information on what programs they have available to you.

5. Check with the Better Business Bureau to find out if those mortgage companies on your list are reputable. You will be able to find out whether or not any complaints have been lodged against them and if the situations were resolved. If a mortgage company has a bad reputation, you should stay clear of them and only speak to the ones that have a good business record.

6. Each mortgage company will be able to offer you information on which programs you qualify for and each program will have different factors to analyze before you make your decision.

7. Compare the cost of the loan. You will need to compare costs of the interest rates first. If one mortgage company is offering you a mortgage for a 5.75 percent interest rate and another is 6.25, you will want to make note of this difference. You will also want to verify if this rate is on a fixed-rate mortgage or an adjustable-rate mortgage.

8. If the interest rate quoted to you is on an adjustable-rate mortgage, you will want to verify with the mortgage company how much your rate would jump when the time comes for it to change.

9. The down payment is another important factor in the mortgage. Some may require as much as 20 percent down, while others will require zero down payment.

10. Compare any fees that will be charged to you from each mortgage company. Fees such as loan origination, underwriting, appraisal, and broker fees are commonly charged when taking out a new mortgage.

11. Check with each mortgage company to find out if Private Mortgage Insurance (PMI) is required and what the total insurance cost will be on your mortgage.

12. Once you have analyzed each program from each mortgage company, you should be able to determine which mortgage company is right for you.

Tips & Warnings

• If a mortgage company is requiring you to pay points on the loan, make certain they quote the points in actual dollars being charged to you. This will allow for a much clearer understanding.

• In order to make sure your analysis of a mortgage company is complete, make certain you have given them all of the information necessary to give you the answers you need on the loan.

• Be aware of mortgage companies that do not explain the loan process to you. A mortgage company should be willing to be there to answer any question you may have and if you do not understand something, they should be willing to explain it until you have a thorough understanding of the loan process.