Cheap mortgages are easier to come by than you might think. That does not mean, however, that a cheap mortgage will simply fall out of the sky and hit you on the head. No, cheap mortgage deals require a lot of patience, research, and hard work to find. But the financial rewards are well worth it.
The good news is that you don’t have to start from scratch and do everything yourself. Help is available in the form of website informational articles, online mortgage comparison tools, online mortgage calculators, or an independent mortgage advisor. Here we present some guidelines to keep in mind when searching for cheap mortgages.
The Power Of Choice
A mortgage is just another consumer product, like a refrigerator or an automobile. This means that you have the ability to exercise consumer choice. You do not have to stick with a particular mortgage provider if you are unhappy with them, or if you are offered a better mortgage deal elsewhere.
So it seems apparent that shopping around is a key element when it comes to finding a cheap mortgage online. But sometimes that is easier said than done. It takes time and patience to research different mortgages in an organized manner. Too often, it’s easy to get overwhelmed, and either give up, or simply take the next mortgage that comes along. So in order to use your power of choice wisely, take your time and do some thorough research. You can’t expect cheap mortgages to jump out at you after only a few days of looking.
The Power Of Comparison
This first and most important point of comparison between mortgages is the interest rate. But the story does not end there. Cheap mortgage rates often come with hefty associated fees, such as origination fees, broker fees, and other closing costs. So a better point of comparison to use is the Annual Percentage Rate (APR). It gives you a better idea of how much a mortgage costs overall, because it takes into consideration most or all of the additional fees and presents you with a single interest rate that offers a more meaningful comparison.
Online mortgage comparison tools are also available. They let you compare one cheap mortgage quote to another, side by side, so that you are better able to compare apples to apples. For example, a cheap fixed rate mortgage can’t be compared to one with an adjustable rate.
With so many different features available with different mortgage products, it’s easy to get them confused and thus make a false comparison. So whether you are searching for first or second mortgages, fixed or adjustable rates, remortgages or refinancings, using an online tool can help you keep them all straightened out.
The Power Of Mortgage Brokers
An experienced mortgage broker can save you a considerable amount of time and money in your quest for cheap mortgages. Because of their lender contacts and market expertise, they know the mortgage market far better than the average borrower on the street. They may know about a cheap mortgage lead that you might never be able to find yourself.
Mortgage brokers will save you plenty of time by doing the heavy searching for you, and will bring you several cheap mortgage quotes for your consideration. They can also save you a tremendous amount of money if they can find you a great deal that you were not able to find on your own.
You need to determine if your mortgage broker is independent or “whole of market”, which means that he or she will bring you quotes from the entire mortgage market, or whether only a restricted range of lenders is being considered (usually only lenders willing to pay a broker commission).
The Power Of Fine Print
Closing costs are not the only hidden expenses that can make cheap mortgages turn out to be not-so-cheap. Cheap mortgages are often saddled with unfavorable terms that more than compensate for the low interest rate. Look for prepayment penalties or early repayment charges (ERCs) that may lock you into a mortgage for a longer period of time than you might like.
It is also very common for a special introductory rate to be advertised which seems like a great deal, but turns out to be very expensive further down the road. These initial “teaser” rates must be approached with caution. It is smarter to make your comparisons in the second or third year of such loans, after the initial rate has expired and the long-term rate has taken effect.
Sometimes the lender may require the purchase of an insurance policy in order to qualify for the cheap mortgage rates. Or there may be other terms that drive up the long-term cost of the supposedly cheap deal. The best approach is to get a complete list of all charges and restrictions in writing. That gives you the time you need to ask questions about any charges that you do not fully understand, and allows you to compare them properly to other lenders.
The Power Of Negotiation
Once you have found one or more cheap mortgage deals that you like, don’t stop there! This is the time to try to negotiate even cheaper deals. In the course of bargaining, some of the associated fees and costs might not able to be reduced or waived, but many of them can be. You should feel comfortable asking for as many lender concessions as possible; now is not the time to be shy!
It is to your advantage to have already lined up two or even three cheap mortgage quotes that you can use play off of one another, in order to negotiate a better deal. The mortgage market is very competitive, and most lenders are willing to offer some money-saving concessions in order to gain your business. Don’t underestimate your power to find cheap mortgages, it’s easier than you think!
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