How To Locate The Best Home Mortgage Loans


Home loans can be obtained from many kind of financial institutions i.e. commercial banks, home loan societies, government banks, credit unions etc. All lenders have their own set of requirements in terms of document as well as their own interest rate. It often becomes a question to ponder for the borrower as to which lender to choose from. The answer is simple but relatively tough to follow, shop around the housing finance market, gather knowledge from different sources, their rules and regulations, their mode of operation etc. However it is not as easy as it looks, as many lenders have hidden cost to make most out of a deal. Customers can also take help of broker in deciding, brokers are often very closely related to the market and thus have most up to date knowledge about various financing institutions. Brokers contact several lenders related to your application and choose the best feasible option to meet your requirement. They are also well aware of the legalities of transaction.

Whether you are directly involved with the lender or through the broker, in both cases there is a second party involved hence you should take due care in choosing. Property & Mortgage Brokers also charge a fee amount apart from the loan processing fees charged by the lender, so it is all the more important for have all the information. A broker can charge as 'points' at the time of closing or also as an add-on to your interest rate.

Monthly Instalment

You should also be aware as to how much down payment can be afforded by you, most of the financial institution ask for initial 20 percent down payment apart from some cases where mortgage loan is insured. Once decided on the down payment amount, calculate the remaining amount as per the tenure on the applied interest rate, this would tentatively give you your monthly instalment before signing the deal. Apart from this there are many more costs involved as well i.e. loan processing fee, which amounts to a certain (2 to 5 percent of your total loan) amount. All this would roughly give you an idea of total money you need to pay per month and you can estimate your affordability, if not affordable perhaps you can surf for other options.

Loan Fees

A home loan as already discussed has different evident as well as hidden cost. Some of them are processing fees, transaction fees, broker fees, settlement and closing fees. All this should be taken in account at the time of calculating the total cost by the borrower. However some of these fees are also negotiable, there could be some banks which waive off the processing fees in order to have more customers.

Once all this has been taken in account borrower can now easily make a rough estimate of the total cost he is bearing on the mortgage loan. Since interest rate varies from bank to bank, this can be taken as an advantage is the customer. Also with lots of options in financing sector banks are becoming more and more customized, what should be kept in mind is that these attractive customized offers are often given at the time of issuing the loans but chances are that they may prove alluring trap at a later stage.