If this is your time to shop around for a mortgage quote, you will understandably have a tough time sorting all the information in your hands. The best thing that you can do is scrutinize everything first before coming to a final decision. Ask the right questions, study simple mortgage terms, and more importantly, compare different mortgage quotes in the market.
Below are seven tips that will help you find the mortgage quote that works for you.
1. Don't take the first mortgage quote you find.
2. Shop around for a mortgage quote.
There is a lot of competition between mortgage providers, and this will work to your advantage.
3. Don't be deceived by low-sounding initial interest rates.
Low-sounding initial interest rates are known as headline rates. The problem with headline rates is that they usually come with cunningly phrased long-term "tie-ins." When mortgage companies lure you with headline rates, they are forced to lower their profit. To make up for their loss, they will tie you in by making you pay a very high penalty if you switch to another mortgage lender. Some mortgage lenders also force you to purchase their insurance policies by making such purchase the condition you have to follow to avail of the low interest rate.
4. Ask about redemption penalties.
When given a mortgage quote, ask about redemption penalties. A redemption penalty is the amount you pay for discontinuing your arrangements with your mortgage lender. You will be asked to pay this if you want to switch lenders, for example. Redemption penalty is supposedly imposed to compensate the lender for the time and expense incurred because of your leaving.
Some lenders try to hide redemption penalties in small print when they give you a mortgage quote. To avoid being cheated, ask the lender that offers the mortgage quote what the redemption penalties are.
5. Do not pay for a mortgage quote.
Reputable financial institutions know that they are competing with other firms for your hard-earned dollars. They will not charge you anything for information.
6. Getting a mortgage quote is not synonymous to signing a deal.
You are under no obligation whatsoever to go with a certain lender simply because this lender has given you a mortgage quote. Mortgage providers themselves know that when you ask for a mortgage quote, you are only shopping for better mortgage rates and terms.
7. Do not hide the fact that you are shopping for a good mortgage quote.
When different lenders call you, let them know you are comparing different firms' rates, terms, and refinancing options. They wouldn't want to lose you to the competition, and they would thus try their best to offer you a better rate than their competitors.
Finally, you need to remember is that there is no shortcut to getting your own home. Shopping for a mortgage quote will always be a long and daunting process, and anyone who tells you otherwise is either simply giving you false hopes or is trying to steal your money.