Looking for the Best Mortgage

Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage–whether it’s a home purchase, a refinancing, or a home equity loan–is a product, just like a car, so the price and terms may be negotiable.

You’ll want to compare all the costs involved in obtaining a mortgage. Shopping, comparing, and negotiating may save you thousands of rands.

Obtain Information From Several Lenders

Home loans are available from several commercial banks and mortgage companies. Different lenders may quote you different prices, so you should contact several lenders to make sure you’re getting the best price. You can also get a home loan through a mortgage broker.

Brokers arrange transactions rather than lending money directly; in other words, they find a lender for you. A broker’s access to several lenders can mean a wider selection of loan products and terms from which you can choose. Brokers will generally contact several lenders regarding your application.

Be sure to get information about mortgages from several lenders or your mortgage broker. Know how much deposit you can afford, and find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough.

Ask for information about the same loan amount, loan term, and type of loan so that you can compare the information. The following information is important to get from each lender and broker:

Rates

• Ask your mortgage broker for a list of its current mortgage interest rates and whether the rates being quoted are the lowest for that day or week.
• Ask whether the rate is fixed or variable. Keep in mind that when interest rates for variable-rate loans go up, generally so does the monthly payment.

Fees

A home loan often involves many fees, such as initiation fees, registration fees, cancellation fees etc

Every broker should be able to give you an estimate of fees. Many of these fees are negotiable. Some fees are paid when you apply for a loan (such as initiation fees), and others are paid at closing.

In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. “No cost” loans are sometimes available, but they usually involve higher rates.

• Ask what each fee includes. Several items may be lumped into one fee.
• Ask for an explanation of any fee you do not understand. Some common fees associated with a home loan closing are listed on the invoice.

Deposit and Mortgage Insurance

Some lenders require up to 20 percent of the home’s purchase price as a deposit. However, many lenders now offer loans that require less than 20 percent down–sometimes as little as 10 percent on conventional loans.

• Ask about the lender’s requirements for a down payment, including what you need to do to verify that funds for your down payment are available.
• Ask your lender about special programs it may offer

If Mortgage Insurance is required for your loan,

• Ask what the total cost of the insurance will be.
• Ask how much your monthly payment will be.
• Ask how long you will be required to continue with the insurance

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