Get the Best Loan

A mortgage is probably the most complex and least familiar product you've ever shopped for. Sure, you have credit cards and probably a car loan, but those are a lot easier to understand than mortgages. There are many decisions to be made and a single mistake can cost you thousands of dollars. While you shouldn't let someone else make your choices for you, it's also unwise to try to do everything yourself. Finding a knowledgeable, trustworthy mortgage professional is a key first step toward success.

Step 1: Choose a good lender
A knowledgeable mortgage professional can help you set goals and secure a loan that is suited to your needs. Home loans are available from a number of institutions—from banks and credit unions to mortgage bankers and mortgage brokers. Within a few miles of almost everyone in America, there is a terrific mortgage professional working for a trustworthy company.

Step 2: Loan types
When choosing a mortgage, your two most significant decisions are whether to get a fixed rate or an adjustable rate, and how long the term will be.

Step 3: Rate versus fee; understanding points
No single issue confuses borrowers more than "points." Points are an upfront fee that is paid to lower your mortgage interest rate. One point is 1 percent of the loan amount. On a $200,000 loan, 1 point would be $2,000 and 1.5 points would be $3,000.

Step 4: Get pre-approved
Before you start shopping for a home, you need to work with a lender to get pre-approved for a mortgage. Pre-approval is basically a promise from the lender that you're qualified to borrow up to a certain amount of money at a specific interest rate. This promise is subject to a property appraisal and other conditions.

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