The Joys of Comparison Shopping for Mortgages
Comparison-shopping for mortgages confusing you? It's a world of "points," "ARMs" and a barrage of surprise fees. In recent years, it has become even tougher to compare mortgages because now we have all sorts of new offerings, like interest-only mortgages and such which enable you to delay more of the pain of paying off that debt.
Unfortunately, when you delay paying off your debt, you inevitably find it costs you more over the long term.
As interest rates climb, that long term cost gets even higher. It makes it even more important to aggressively shop around for the best terms. For instance, over 10 years, a difference of just 0.125 percentage point on the mortgage rate on a $500,000 loan can rack up over $6,000 in extra interest payments. And that's $6,000 that could be in your pocket.
The problem for borrowers is that lenders have a vested interest in making it tough to compare rival offerings. After all, if you can't compare, they might be able to get your business, despite costing you more! The major challenge to comparison shopping is that each lender offers different combinations of interest rates, fees and other terms, making it hard or impossible to figure out which one is best.
Your best bet is to do your research. The more you know, the less likely you can be parted from your hard-earned cash. Another good bet? Consider the help of a knowledgeable financial professional who is willing to work as your agent. Finally, you might want to invest in a lawyer before signing your mortgage papers, although most companies will make that difficult if not impossible by presenting the papers to you at the last minute during your closing. However, a lawyer can also help you avoid some of the pitfalls, and counsel you regarding hidden fees (which are usually buried in the fine print).