Home Mortgage Loan Quote

There are a number of different places to get a home loan mortgage quote. However, comparing quotes from two different sources can be challenging at times, even for two loans of the same class, such as 30-year fixed rate loans or 5/1 ARM loans. To make an accurate comparison and get a sense of which mortgage is worth pursuing, a potential borrower needs to focus on three things. By ascertaining if the quote is personalized, looking at the APR, and understanding the cash required to close the loan, one can find not only the best mortgage, but the best mortgage for them.

The most important thing with a home mortgage quote is to ensure that it is personalized for one’s actual circumstances. It is quite easy to find sources which will provide an interest rate on a loan in a given state. Referred to as “loan sizers,” these tools give a rough sense of what loans are available, but do not reflect exactly what a given borrower can expect. An actual quote will take into account one’s current credit scores as well as the size and location of the property that one is looking to acquire or refinance. Finally, it should take account of the loan-to-value ratio of the actual loan since this can affect both the interest rate as well as the potential requirement for additional mortgage insurance.

Which mortgage is better—one with a 4.95% rate or one with a 5.1% rate? Most borrowers would assume that the 4.95% loan is better, but if it also included 3 points to buy down the rate, the 5.1% loan with no points would actually be preferable. There are a number of variables that go into the pricing of a loan including a vast number of fees, points and charges. To enable borrowers to more easily compare loans, Federal law requires that lenders present an accurate APR which will reflect the total cost of the financing, including the interest and all fees and charges. The APR presents all of these charges as an annual percentage rate. The loan with the lowest APR is, ultimately, the least expensive loan.

The last consideration when looking at a home mortgage loan quote is the estimated cash required to close the loan. Although the total cost of the loan is expressed in the APR, its does not distinguish between whether the cost of the financing comes from long-term interest or upfront costs. For many people, whether they need to furnish a new home, or need to save money by refinancing, minimizing out-of-pocket cash is important. With this in mind, borrowers should look at this to decide if a 5.25% loan with no cash to close is better than a 5.15% loan with $1000 required in out-of-pocket costs.

Ultimately, comparing home mortgage loan quotes requires careful attention to a number of details. Only by going beyond a simple rate can one truly find the best loan possible.