A Guide to Shoping For A Mortgage

When it comes to large purchases, shopping can be confusing. No matter what we are buying, from large screen TV's or a car. If you don't know what value is, then you could make the wrong decision when shopping for a mortgage. The system always has an element of confusion built into it. And unfortunately, the rule of thumb is that the less we know about something we need to buy, the more we can expect to pay for it.

Shopping for a mortgage is complex at best, even for the savvy previous home owner. Daily rate changes, time-sensitive lock-in periods, points, lender's fees, etc... Shall I go on? Not to mention the tricky advertising that comes along with shopping for a mortgage. You have commissions for everyone and their mother if they help you with your transaction. Are you aware that there is a difference between the lender and a mortgage broker? A mortgage broker will be getting paid for linking you to a mortgage. It's like paying for something you can do yourself. Most Lenders have similar programs that mortgage broker's will tell you only they have. And you pay up to about 1% of the mortgage for that mortgage broker's service. That could be from a thousand dollars and up? It's not surprising that many people settle for a mortgage that exceeds their monetary means out of sheer exasperation!

So, what can we do?

The answer is education. If we know how to shop for a mortgage we can be better prepared to get the best deal out there, or at least not ripped off.

What is the difference between APR and Interest Rates?

You've seen it on your loan documents but you've never really asked what it meant, right? As long as you saw your monthly payment was the amount quoted, who cares? Well, if you want to know what you are spending your money on, you should care. People have a tendency to think, out of site, out of mind when it comes to loans expenses, as long as that monthly payment is what they told it would be. Hey, do you count your change before you leave the cashier counter when you go to the store? Well, then you should care what you are spending your hard earn money on because you can shop around based on knowing what the different banks APR's are.