Reader’s Question:

When I mentioned to my friends and co-workers that I wanted to apply for a home loan, I was literally swarmed by phone calls from lenders and it seems like there are just as many lenders as there are loans. It’s very challenging for me to decide. Can you tell what do I need to consider when comparing loans in Dallas?

Arthur

Dallas, TX

Yes, you are absolutely right when you said that there are just as many lenders as there are loans. When you are given hundreds of choices it may seem overwhelming at first. When you compare loans, it can be very tricky because there are so many types available. But it’s good to know that you have different financing options to choose from.

There are important factors to consider when comparing loans such as: interest rates, required down payment, loan-related fees, point (a one-time charge by the lender for originating a loan. A point is 1 percent of the amount of the mortgage), pre-payment penalties (A fee that may be charged to a borrower who pays off a loan before it is due) and conversion options (like converting an adjustable to a fixed-rate mortgage).
You may also investigate the requirements for qualifying for each loan. These requirements usually include: your credit score limits, your cash and credit reserve requirements and loan-to-value ratios (the relationship between the principal balance of the mortgage and the appraised value/ sales price of the property).

To simplify, you need to check of the following when comparing loans: lower interest rates, lower loan fees, minimal features, less flexibility and no additional repayments.

Arthur, you also need to know about the lock-in period. This is the time period during which the lender has guaranteed an interest rate to a borrower .If you’re comparing lenders, be sure you not to compare apples to oranges, meaning the type of lender versus the type of loans. The process however is process quicker and easier if you have a crystal clear picture of your finances. Plan ahead and decide on what kind of monthly payment fits your budget. By then, you can easily eliminate loans and lenders that are not suitable for financial needs in Dallas.

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