What Is The Best Way To Compare Loan Terms Between Lenders?
When you bought your first big asset, such as a car, you probably received several quotes before even starting the financing paperwork. The same holds true for home purchases. Every lender has a slightly different loan program, based on your credit history and prospective property. You should always obtain at least two to three home loan quotes before settling on a lender. Comparing their terms may be confusing, but there is a simple strategy to keep all the information straight.
Make A Comparison List
Whether you use a software spreadsheet or a lined piece of paper, make an individual column for each lender, along with their address and phone number. List all critical deciding factors along the far left side. Under each lender, notate their specific mortgage type, such as fixed or adjustable, minimum down payment and interest rate. Add in closing cost estimates, applicable points and pre-payment allowances. Lastly, add in the loan processing time factor. This portion is often the deciding factor for many homebuyers. If a loan is set to be processed within several months instead of weeks, borrowers should search for another lender.
Compare all the information on this list to narrow down your options. Ideally, you want a home loan with a reasonable processing time, low interest and small down payment. A local lender is always a bonus because they understand the neighborhood’s culture and economic conditions.
Same Day Information Is Key
Although you may have a list a mile long, it is crucial to compare interest rates quoted on the same day. Call each lender and inquire about adjustable and fixed rates for the day. Notate each rate down, and continue to call the remaining lenders. Interest rates cannot be compared fairly if they are obtained over several days because rates change each day. Base your lender selection off a same-day comparison of interest rates to see the true differences.
Your Real Estate Agent As A Resource
Real estate agents work with lenders on a daily basis. If you have an experienced agent, they probably have a database of their favorite lenders. Working together, the lender and agent can quickly sell homes to boost their bottom line. Networking within the real estate industry is intricate, allowing you to take advantage of your agent’s experience with a quality lender offering low rates.
Comparing loan terms between lenders takes time and focused concentration. Create your checklist to remove the lenders that do not suit you. You’ll find two or three in the end that will help you finance your new home.
Jessica Lucas
