When most homebuyers begin the process of shopping for financing, they begin their search by comparing interest rates. While this is probably as good a place to start as any, there are several other factors that need to be considered.
Whenever there is a closing on a real estate transaction there will be closing expenses. Lenders, Appraisers and Closing Attorneys will all charge fees for there services. It is critical that the homeowner understands what the fees are and what they cover. These fees can be paid by the homeowner or the lender may absorb many of them.
A good way to compare fees between lenders is to ask for a Good Faith Estimate. This document will summarize all the fees associated with your transaction. This will give you a figure that should come close to the amount that you will need to close the transaction.
It is, also, important to carefully review the terms of the loan you are applying for. If it is an adjustable rate mortgage you will need to know when it will adjust and how much the adjustments can be. Is there a prepayment penalty for paying the loan off early? If you are financing more than 80% of the properties value, is there mortgage insurance and how much is it?
