12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!Read More »
Four Factors in Comparing Mortgage Companies
By Richard BarringtonNFNS Columnist
Since people may only
buy a house once or twice in their lives, they don't have the opportunity to
acquire a lot of experience shopping for a mortgage. This is a shame, because
with any commitment of fifteen or thirty years, even small differences can
become very important over time. This is why mortgage shoppers should compare mortgage
companies before making a commitment.
Comparing mortgage companies may seem like a natural step,
but the truth is that many people don't look beyond their savings bank or the
recommendation of their real estate agent. Part of the problem is that people
don't really know how to go about comparing mortgage companies. The following
are four factors to consider in such a comparison.
- Mortgage rates. Mortgage rates tend to rise and fall across the entire market, but even so, there are small differences in the rates offered by different mortgage companies. There are several reasons for this, including the various cost structures and profit margins of the mortgage companies, plus each company's level of aggressiveness in making loans at the current time. Even within a given company, these factors are changeable from one month to the next, so the company that had the best rate at one time may not have the best rate now. The only way to find out is to shop around, and keep track of rates from different companies weekly until you are ready to commit.
- Points and other costs. Keep in mind, mortgage rates aren't the only cost factor. Different mortgage companies may charge different loan origination fees and other costs. Ask for full written disclosure of all fees and expenses, and use a mortgage calculator to help compare these one-time differences with ongoing differences in interest rates.
- Your credit rating. Your credit rating may be the same for all lenders, but how they respond to that rating can vary greatly. Each mortgage company will have its own threshold at which they will start charging extra interest for bad credit, and they may differ in what they charge and where they will cut off eligibility for credit altogether. Even if you have spotless credit, this is a factor -- in the current environment, some mortgage companies will be especially aggressive in going after high-quality borrowers.
- Rapport
and responsiveness. These intangibles can be essential to getting you
through the mortgage process with your sanity intact. Judge mortgage
companies on how well their representatives explain things, and also on how
quickly they respond to your inquiries. The last thing you want is a
company which drags its feet when you have an offer on the table.
One other benefit of comparing mortgage companies is that
the process itself will help you acquire more knowledge of how mortgages work. It
will also help you evaluate the accuracy of the information you are being given.
You can check one company's answers against another's until you find a comfortable
consensus.
About the Author:
Richard Barrington is
a freelance writer and novelist who previously spent over twenty years as an
investment industry executive.
About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.