Getting the best Home Loan

When shopping for a mortgage loan , it is crucial to make sure that you compare mortgage  loan offers to see if you are getting the best deal.  But for many home owners  comparing  mortgage   loans is not an easy task.  Below are some easy steps so you can do to compare several different home  loan offers  and make sure you are getting the best possible home loan.

Verify that your loan officer   has a National Mortgage Licensing System Number

The first step you will need to do is make sure that you are working with a licensed mortgage officer  .   In 2010  , both mortgage  bankers and  home loan brokers have to be licensed.  Each loan originator must have a license number that is part of the National Mortgage Licensing System (NMLS).  Each loan  originator  must display their NMLS number on any form of marketing materials, website, and any other advertisements.   You should always ask a loan  originator  if they have a NMLS number.  Finally, loan  originators  can only do  loans in states they have a license in.  For example, if I have a mortgage license in Texas, then I can only originate Texas home loans.

Compare Apples to Apples

The hardest thing to do when shopping for a  mortgage loan is trying to compare offers  from all the different lenders .  The reason for this is that many companies have different closing cost and offer different rates, but if you understand how to ask the right questions, this process can be simpler.

First, do not ask  the question, “What is the best rate you can give me.”  This question is open ended  and closing cost plays a major factor in the rate.  The best rate a company can offer you will have the most closing cost.  When trying to compare mortgage proposals from other lenders , this can be tricky.  Instead, you should ask the question, “What is the mortgage lender   closing cost associated with a 30-year FIXED rate home loan   at X%?”

This question is direct and will make choosing a  mortgage lender much easier! 

Every home loan lender  can tell you what the lender closing cost will be at a specific rate.  For example, Lender A charges $2100 in lender cost for a rate of X% and Company B will charge $2500 in lender closing cost for the same rate.  When comparing these numbers, it is easy to see that the Company  A is offering the best deal!

When comparing closing cost, only compare the LENDER closing cost.  Most  mortgage companies will estimate 3rd party charges like title company fees or attorney fees and prepaid items like property taxes and home owners insurance.  These fees are estimated and are charged by other companies other than the home loan lender .  Let’s use the same  lenders in the example above and say that Company A estimated prepaid and 3rd party fees at $3500.  Company B estimated these fees at $2500.  When you add their  mortgage lender fees to the closing cost estimate, Company A is at $5600 and Company B is at $5000.  It looks like Company B is offering the best deal , but since these are only estimates, Company A is still offering the best deal since they have $400 less in LENDER fees.  Think of LENDER fees as the charge for the interest rate.  These are also the fees that the  home loan lender  has control over!

Finally, when comparing home loans, compare like rate offers meaning that if you are getting a quote for a 30-year loan at 4.75%, make sure that all offers you are comparing have the same rate.   Also, make sure you are comparing the rate with the same mortgage  program.  For example, compare FHA home loan  rates with other FHA home loan rates.  You do not want to compare a FHA mortgage loan with a Conventional home mortgage loan since these are two different types of home loan  programs.

Hopefully this will help when shopping for a home mortgage loan.