Comparing loan offers

It’s pretty easy to go on-line and get figures about your next home loan. Does what you see on the screen actually end up being what you get? It’s not always a matter of bait and switch; it’s a matter of the intricacies of loan pricing. Here’s what to consider when you are comparing loan offers.

Right off the bat, I can think of at least 19 factors that affect your home loan interest rate. For a more complete discussion, see the article on my web site. Point being, if all 19 things are not brought into consideration up front, the interest rate and points being used for your calculation won’t mean anything.

But let’s make the super-duper extra-ordinary maniacal assumption that your competing loan quotes have asked all the pertinent questions needed for accuracy as to rate and points. Of course you’ll compare the two from each quote. Your next step is to compare the line items that actually bear comparing.

Meaning, your Realtor has already put in the contract which escrow and title company you want to use for closing. Since you have chosen the provider, those line items in the quote have already been determined and are beyond the lender’s control.

Likewise, we’re quoting an impound account for taxes and insurance. Property taxes are determined by the home’s value, and you get to choose your own homeowners insurance company, so those numbers are out of the lender’s control. These impound totals, however, are really easy to manipulate, because we can change the number of months in our quote. The figure you get will affect how much cash you’d need to bring to the closing, so you want to know if the projections are real.

The appraisal fee and credit report fees should be compared between quotes, as your lender chooses the service provider for both. Likewise, any upfront application fees or loan processing fees should be compared.

After all is said and done you’ll have a reasonable idea about how the quotes compare.

One last huge giant thing: Make sure you are comparing like financing strategies. The right rate on the wrong program can cost you untold money over time.

Tammy Engel is your local Mortgage Advisor and has been working for your best interest since 1990. Contact her at (661) 822-7325 for help with purchase, refinance, and reverse mortgage.