How to Find the Best Deal on a Homeowners Loan
Homeoners loans or mortgages are generally easier to obtain than unsecured loans. The main reason for this is that the property in question is charged against the loan as collateral. This reduces the risk for a lender to extend a loan, and so the type of loan, interest rate charged and length of repayment become vital factors when an applicant gets offered a contract.
To many people, the ease with which secured loans are available can be a problem. These are usually people who may have had loan applications rejected elsewhere. When they find a lender who is willing to entertain their request, they are so overjoyed that they accept the first offer.
This need not be the case as the loan market is a competitive market and lenders can be willing to make their offer more competitive when they become more fully aware of an applicant’s circumstances. Getting the best deal on a homeowners loan has more to do with laying all your financial facts on the table and shopping around for the best deal.
The key is shopping around
Jumping for just any offer is likely to prove a costly bit of haste. If one lender offers you a loan for your property, it is likely that others will, too. Lenders work on different terms, though. Not only do you stand to save on the interest you are charged, you may also save on fees. Your savings can amount to as much as 2% of the amount borrowed.
The way each lender judges an applicant’s credit score can vary. What one lender calls a poor credit rating, another could deem an acceptable risk. This can completely change the arithmetic of what you end up paying.
Where should you look for a good deal?
There are two ways that you can predictably come by a good deal. You can either simply apply to every lender that you find or you can use the services of a loan agency like Creditlink. When you try a broker, you have the advantage that you get advice and options that you would have a hard time coming by yourself. If you aren’t good with financial matters, using a broker could be a great way to zero in on a good deal.
You need to make sure that you understand what you’re signing up for. If you aren’t financially savvy, reading through pages of fine print. If there are things you need explained, it is better to ask the lender before signing a contract.
Here are a few tips to help you get the best deal possible
Before you approach a lender for a loan, make sure that you know what your home is worth. You should get it evaluated independently.
Impress the loan officer with a well-organized set of documents. Organized financial habits make a borrower look more likely to repay his loan. They also give the loan officer a clearer picture of why you believe that you can make good on a loan. You need to be realistic about the money you expect.
Chris Hughes is a personal finance consultant. He enjoys sharing his money saving tips online through blogging.