Obtaining the best rates for your mortgage loan can help you save thousands of dollars in the long run and set you up with mortgage deals that not many people can benefit from.
While lenders often advertise their own rates as being the “best”, not every offer can be considered as a viable one, and borrowers usually have to employ a fair degree of care and consideration before agreeing to the terms of a lender, especially when the term of the loan exceeds 15-20 years.
Understanding the Importance of APR
The APR (annual percentage rate) is one of the most significant, as well as the most confusing factors associated with mortgage loan rate comparison. While the formula for calculating APR is somewhat the same and available for all to use, the actual rules for computing it can vary from lender to lender, since some lending companies may add fees that others don’t.
Generally, some fees are always added to APR calculations. These will likely include discount and origination points, loan processing fees, pre-paid interest or underwriting fees. However, sometimes loan application, credit life insurance and other fees are also added which is what makes the results so variable.
In fact, it can happen that a lender using two different types of software for calculating APR may arrive at two different APR values. As a result, it is highly essential to use APRs as a basic starting point when comparing rates and getting good faith estimates from various lenders before agreeing to any specific offer.
Take All Variables into Account
While back in the old days borrowers had to calculate their own mortgage rates or rely on trusting lenders that their numbers and costs will not vary too much in the future, today, avoiding debt by choosing the right mortgage can be done in a far easier and more accessible fashion with the help of online technology.
Using an online mortgage loan calculator and comparison tool can help you save a lot of time by presenting you with a complete outline of the offers provided by different lenders.
This can be of great consequence when trying to determine which of them would be the best choice on a long term basis since, aside from the value of the initial interest rate and monthly repayments, you can also get a clearer picture of how the differences posed by ongoing repayments will factor in to your overall expenses.
As a result, if a particular lender provides a very low initial interest rate, upon reviewing the estimated increase of their rates, you may find that ongoing payments might actually be higher than those from lenders that ask for a mildly higher initial rate.
Nevertheless, it is important to note that the computations you get from an online calculator, however accurate, are only estimates that often still fall short of the exact values you will end up with after signing a contract with a specific lender.
Before selecting a specific financial product, it is always best to check with the actual lender and confirm the final repayment values that can be applied to your loan in order to make an informed choice overall.