You’re shopping for a mortgage and you’ve received four offers from four lenders. How do you choose? The first factor most people consider is the interest rate and other costs, but that’s only the beginning. You’ll also want to think about the lenders themselves, not simply the numbers they’re tossing your way.

Here are five steps to follow when determining which lender is right for you:

1. Compare fees as well as interest rates

Comparing loans based on their annual percentage rate (APR) is a good place to start, but it’s not enough. In the case of a mortgage, to get a more accurate breakdown of costs, ask the various lenders for a formal “good faith estimate” of all the fees you’ll incur with your loan — this is a standard form lenders must provide you that is more detailed than the overview you’ll get with an offer. Also, ask about potential charges that may not appear on that list, such as prepayment penalties. You’re not just comparing numbers here: determine how honest and upfront you feel the lender is being, and don’t use a lender that you feel is evading your questions.

2. Consider your individual circumstances

Bigger lenders aren’t necessarily better than smaller ones, especially if you have unusual circumstances. For example, some lenders specialize in loans for people with poor credit, while others may have more options for those with small down payments. If you have special borrowing needs, look for a lender with experience working with people in similar situations.

3. Look at the range of loan types available

There are more loan options available than ever before, so take advantage of all that choice. Look for a lender who offers a wide variety of loan types, from conventional fixed-rate and adjustable-rate to newer ones such as hybrid ARMs and option ARMs. Your lender should be able to match you with a mortgage that’s right for your financial situation and risk tolerance.

4. Evaluate the level of customer service

When you’re comparing offers, ask each lender about their policy regarding locking in their quoted rates and see whether there is a fee. Also, ask them to amend one of the terms (such as a payment cap) and see how willingly they agree. You’re looking for flexibility and responsiveness. And also note how well they listen to you. If you ask for a 30-year fixed-rate mortgage, they ought to present that as an option, not push you toward something different, such as an interest-only loan. If you’re not getting good service from a lender who is competing for your business, you’re not likely to get it after you’ve agreed to work with them.

5. Check out the lender’s reputation

Word of mouth is important in every business, including the loan market. If you’ve never worked with a particular lender, you’ll want to find out the opinion of people who have.

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The fact that home finance has developed into an immensely diversified and complex business, is a sign of worry as well as joy. There are more ways today for you to borrow money to buy a house than ever before. At the same time, there are also various means by which lenders can take undue advantage of a customer due to the presence of such clauses as hidden costs and penalties levied for prepayment of loans and many more.

Allow your lender to inform you about all the options of home loans and finances available to you, but when you take a final decision, make sure you ask as many questions as you deem necessary. The following questions will help you understand the financial product clearly and make an informed choice:

1) What is the rate of interest?

2) What is the annual percentage rate or APR (APR includes mortgage insurance, points and fees)?

3) How much is the initial rate (in case of ARM is the rate of mortgage adjustable)?

4) What is the maximum rate that can be reached in the following year in case of ARM?

5) How much caps are applicable for lifetime as well as annual payment and what is the rate of interest in case of ARM?

6) Which index is used to act as a reference point for creating rates in case of ARM?

7) How much is the index money that is clubbed with the index (for example in case of ARM it may be 3% over and above the index value)?

Is it mandatory to take a life insurance specifically to cover credit?

9) How much would I have to pay in the absence of such insurance policy?

10) Is it possible to waive any of the costs or fees?

11) Do I have to pay a penalty for prepayment of the loan?

12) How much is the penalty for prepayment?

13) Till what time would the penalty clause be in effect?

14) Do you allow the payment of additional principal amounts?

15) Is it possible to lock-in the rate of interest for a specific time period in order to safe guard against abrupt increase in interest rates?

16) Are you prepared to give me the details of the lock-in period in writing?

17) When do you lock in the rate— do you lock in at the time of application or when the loan is approved?

18) If the interest rate decreases will I get a lower rate too?

19) What are the mandatory inspections and surveys that are to be carried out?

20) Is it mandatory to take title insurance and/or a title search? How much would it cost?

21) Can you give me an approximation of the prepaid sums that I will have to pay at the time of closing?

22) Do you have the provision of availing of discount points to get a lower rate of interest?

23) What are the stamp taxes, local taxes, transfer taxes and state taxes that I will have to pay?

24) Is it required to get a flood determination to ascertain whether the property in question warrants flood insurance?

25) Are there any other costs involved?

26) Do I need to know anything else?

Lenders might not appreciate answering so many questions; however you are entitled to ask all the questions that you want before taking a loan. A one percent higher interest rate would cost you $30,000 more in the long run for a loan of $150,000. Therefore making an informed choice would help you save a lot of money in the long run.

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These days, credit in very easy to obtain for those living in the UK. Those looking to led money include small scale money lenders, mail order firms, credit unions, finance companies, insurance companies, credit card companies, building societies and banks. Most of us will eventually require credit in some form or another, whether it is a mortgage to buy a house or a loan to purchase expensive electronics, furniture or a new car. The definition of credit is buying a product or service under conditions that offer you time to pay it off. That credit itself is paid for in the form of interest. Those who borrow money would be wise to check the APR (Annual Percentage Rate) to make sure they are getting the cheapest credit possible.

General Points to Consider – Buyer and Seller
The expiration date of the tax credit is November 30, 2009. Close December 1, as of now, and any qualifying buyer will not receive the tax credit. With the 30th falling on the Monday following Thanksgiving, where possible work towards a closing date of November 24th. This will provide some cushion if anything pops up in the closing process that could delay a closing.

Recent legislation mandates that if the Annual Percentage Rate or APR changes outside acceptable tolerances from the initial application, some documentation needs to be re-disclosed and time needs to pass before the closing can occur. Items that can impact APR can include a change in interest rate or fees required to close. If a buyer delays locking the application and interest rates increase during the loan process, this could delay the closing. This is just one reason to plan accordingly and schedule an earlier closing date than the last possible day.

Protect your clients on both sides with extended closing dates of 45-60 days. Expectations are high that more FTHBs will be going under contract in the next month. Interest rates have fallen to levels not seen since May. The result is that many lenders’ pipelines will be swelling with people seeking to take advantage of lower rates and the tax credit. Where feasible, work to get people under contract soon and plan accordingly to allow for any processing delays that could result.

Seller Points to Consider
Many FTHBs are motivated to purchase but may lack the necessary funds to close or may fall short in qualifying income. One way to assist with either or both situations and make the property more attractive is to promote that the seller will pay to reduce the borrower’s interest rate and/or closing costs. In many cases, this will not only cost the seller less than a price reduction but also bring additional prospects to consider the house.

Most FTHBs today are choosing to obtain loans that are guaranteed by the FHA, VA, or USDA. In the case of both FHA and USDA loans, the seller can pay up to 6% of the sales price or appraised value. For VA loans, the maximum seller concession is capped at 4%.

Consider approaching all sellers today with homes that would appeal to FTHBs and get them to commit to paying closing costs and/or reducing the buyer’s interest rate. This has often worked for builders in generating sales and it can work for your sellers, too.

Sellers who do not move homes before the end of November may find themselves waiting until the spring buying season kicks in to find their buyer. Make sure sellers know they need to promote their property now or risk waiting months while potentially seeing their property’s value decline in the process.

Buyer Points to Consider
In the same light as just mentioned, many buyers may feel they lack the funds required to close. When buyers are interested in a property, encourage them to submit an offer with the concessions needed to get the mortgage approved. They may just find that the seller is willing to negotiate.

Get all potential buyers pre-approved. As the time to close will be at a premium during the months of October and November, any work that can be done to expedite the application process will be golden. Prepare your buyers by advising them not to wait until they have a home under contract. Any documentation submitted today for pre-approval should be good through the end of November. Also, with a pre-approval in hand, both you and they will know exactly what they can qualify and shop for.

If you want to help with the application process and prevent the need to possibly re-disclose loan documents, encourage your buyers to lock their interest rate early in the loan process. This will be helpful for all parties and help the buyer focus on closing and providing any additional documentation that may be needed.

Some Questions on Who May Qualify
I have received many questions regarding who may and who may not qualify for the FTHB tax credit. I am attaching to this letter some FAQs on examples I have either dealt with or read about. As always, I encourage anyone with specific questions to consult with an accountant for final clarification.

Let’s Move Some Property!
If you have any questions from either a seller or buyer side as to what someone can or can not offer where financing is concerned, pick up the phone and call me. I’m here to help you and look forward to making this year’s November holiday a very Happy Thanksgiving for everyone.