If you’re ready to purchase a home, refinance your home, or take out a home equity loan, you’ll need a mortgage. Mortgage lenders are generally willing to compete for your business, which means that shopping around, comparing prices, and negotiating deals can save you thousands of dollars.
If you want to get the best deal possible, be sure to compare all the costs and understand how mortgages work.
The Better Business Bureau recommends knowing how much you can spend up-front. Before you ask for information from a lender, it’s a good idea to know how much you can spend on a loan and the maximum monthly payment you can afford. This information will be a key part of your negotiations, so review your budget ahead of time.
Understand the difference between a broker and a lender. A broker acts as a middleman, comparing loan options on your behalf. A lender is a bank or other financial institution that loans money directly to you. Get information from multiple lenders and brokers before making a decision.
Make sure you ask about interest rates, loan types, annual percentage rates, points, down payments, mortgage insurance, and all other fees. This will help you get a clear view of the actual cost of the mortgage.
Shopping around for a mortgage lender will help you get a general idea of how much a loan costs, which will help you spot and avoid any offers that seem too good to be true. Be wary of unsolicited calls and emails offering you great rates on a mortgage or “no-cost” loans. Never give in to high pressure sales tactics.
ConsumerFinance.gov warns about a phishing scam where con artists attempt to divert your closing costs and down payment by suggesting, right before your loan closes, that you wire the money into a fraudulent account.