Apples to Apples - Comparing Home Loans

When you are shopping for a home, you will find that you can get very different quotes on home purchase loans from lenders and mortgage brokers. When you get multiple quotes, it is important to make sure you compare apples to apples.

Some brokers may be proposing very different loan scenarios than others, so be sure you fully understand each. Here are a few things to look for.

• Term – Are the home loans that you are comparing based on similar repayment periods? Monthly payments will look a lot lower on home loans with a 30 year repayment period as compared to a 10 or 20 year. Do not be fooled by a low number based on a long term.
• Rate – Not all rates are made the same. First, are you comparing fixed rates or adjustable rates. If you think a rate is too low to be true, it probably is and you are looking at home loans that will eventually adjust based on one financial index or another. Double check that you are looking at home loans with similar rate structures and then compare the actual rates.
• Closing Costs – Different lenders, title companies, brokers, and brokerages have different closing costs associated with their loans. When examining closing costs, make sure that the escrows are accurate and that there are no points or origination fees. These fees can be well hidden and make you think you are getting a better deal than you are.

Take these three factors into account when you are comparing multiple home loans and you will be sure to compare apples to apples.