Buying a Home - Interest Rates Aren’t Everything
Most people shop for a home mortgage based primarily on interest rates, and that is a great place to start. After all, the higher the interest rate, the higher the monthly payments and the more you will pay in total interest. However, when you compare two loans, don’t just compare interest rates. Fees can vary greatly from lender to lender and dramatically impact the total cost of a loan.
Ask for a Good Faith Estimate (GFE) from a lender; it breaks down the different fees associated with a loan. Look for application fees, points, processing fees, and any other charges.
Also make sure you understand all the terms and conditions. For example, some mortgages come with prepayment penalties if you pay off the loan early you could be charged a percentage of the loan amount. (If at all possible avoid loans with prepayment penalties.)When you shop for a mortgage, don’t just focus on interest rates check out the total package.