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How do I know if I am getting a good deal on a mortgage?

By Kevin Landis

How do I know if I am getting a good deal on a mortgage?  Read here to understand what to look for to ensure you are getting a good deal!

Due to economic circumstances, many traditional lenders are tightening their lending requirements.  This is forcing many home buyers to accept mortgages from less reputable lenders.  Unfortunately, many of these lenders attempt to take advantage of borrowers.  The borrower should take the following considerations to make sure they are getting a good deal on a mortgage.

Reasonable Fees

The first item to take into consideration when deciding if you are getting a good deal on a mortgage is if the fees are reasonable.  All mortgage lenders charge some fees, but others try to charge additional “points” or “closing fees” which end up costing 2% or more of the mortgage balance.  To make sure the fees you are being charged are reasonable, you should compare quotes from multiple lenders.

Fixed Interest Rate and Payments

The next item to take into consideration when deciding if you are getting a good deal on a mortgage is whether or not the interest rate and payment are fixed.  Many mortgage lenders offer very low interest rates for the first few years to entice borrowers.  Once the low interest period is through, many borrowers are forced to accept higher interest rates which in the long run make the mortgage more expensive.  A good mortgage should have a fixed interest rate over the course of the mortgage.

No Penalties or Balloon Payments

When deciding whether a mortgage is a good deal, the borrower should also consider penalties and balloon payments.  Many mortgage loan providers will charge pre-payment penalties if the mortgage is paid off before a certain date, or a balloon payment if the loan is not paid off in time.  A good mortgage should not have either a pre-payment penalty or a balloon payment.

Related posts:

1. Should I shop online for a mortgage interest rate?
2. Should I Go With A Fixed Rate Loan Or An ARM?
3. Should I get a 30-year or a 15-year fixed mortgage?
4. Is The Lowest Interest Rate The Best Mortgage For Me?
5. How Do I Get The Best Fixed Rate Mortgage Deal Online?