Mortgage Loan Quote: How it Works for Borrowers
A home mortgage is a costly and long-term undertaking, It is very important to get a clear picture of the financial implications before making the commitment. A mortgage loan quote can help you understand what you will be committing to. Also, things are constantly changing in the real estate market and a quote helps to give one an idea of the state of things and inform their decision.
How Quotes Will Help You
One way that a mortgage loan quote will help you is in determining how much house you can afford. You can use this to start looking for a house that is within your budget. You will also be able to make the best choice of a lender because you will be able to compare quotes from several of them.
A mortgage loan quote will also give you insight into the business model of a lender. Different models will have different implications in terms of the total cost of a mortgage. Ask questions when you receive a quote and seek to understand how they arrive at the interest rates they charge, what guides the setting of other fees and their take on the current market trends and what it means for buyers. You want to take a home loan from a lender who is transparent and accountable and will not change the terms of the loan once you have signed for it.
A down payment is a major aspect of a home loan. It will determine the amount that you will be lent and what the loan will cost you. A quote will guide you on the cost implications of the amount of deposit you put down.
When you ask for a mortgage loan quote, you will get different quotes for different products. You will learn about variable and fixed rate mortgages for instance and the pros and cons of each. You will also learn about incentives for home buyers that are offered by state and federal governments that will reduce the cost of your mortgage.
Just click for a quote
Most if not all mortgage lenders and financial advisors can provide a mortgage loan quote in seconds online. All you need to do is provide details such as your annual income, how much you have that you can put down as a deposit and the amount that you wish to borrow. You will also be asked to enter the duration in which you wish to pay the mortgage.
When you enter all these details, you will get a mortgage loan quote from the lender. If you are on a mortgage quotes comparison site, you will get several quotations that show the rates that different lenders charge. This is very helpful in choosing the home loan with the most favorable terms. It is in fact advisable to get several quotes from such websites for the sake of doing comparisons.
Be cautious: an online mortgage loan quote may not tell the whole story. You also need to understand escrow (property taxes and homeowners insurance) and utilities.
When you do finally make a decision on the lender, you wish to approach for a loan after looking at their terms, do so. It is advisable to submit an application to at least three lenders. This is because, a lender may be willing to negotiate on the terms they offer depending on a number of factors. For instance, if your credit score is good, you can negotiate for even better rates than you were quoted. Market forces are also a factor in demand and supply in the real estate market and a quote that you were given may change at the time you are applying and being considered for a loan. It is thus best to play it safe by making more than one application.
The goal is to get mortgage pre-approval. When you get pre-approved, it means there is a lender who has looked into your financial background, has considered your home loan application and has approved it. You can be certain that your application will not fail to go through because of an underwriting decision.
Pre-approval is however not a guarantee that a home loan application will eventuate. A lender may opt not to lend, but this only happens in unique situations. For instance, a lender may refuse to finance the purchase of a home that has structural damage, one that has open building permits or one that has a purchase price that is not supported by an appraisal of the current state of the market. A lender may also may also go back on the pre-approval they gave if a house has a feature that may negatively affect its marketability such as environmental hazards. You may also choose to go with a different lender if the bank you chose for mortgage pre-approval is not performing to your standards.
This is another reason why it is advisable to get more than one mortgage loan quote. Should such a scenario occur, you will have other lenders to turn to that you have already done your homework on in terms of their terms so you can still go ahead and buy your dream house.
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