Mortgage Comparison

There are different types of mortgages in order to get the best and ideal home loan comparison and rates, each potential home buyer will need to compare the right type of loans. A home loan may include some conventional mortgage loans, FHA, VA and RHS loans.

Conventional mortgage loans are the traditional type of loans offered by financial institutions like the banks. FHA, VA and RHS home loans are loans that are insured by the Federal Housing Administration, Veteran Administration and the Rural Housing Service respectively, such loans are usually provided through some approved lenders. FHA loans may have some fewer requirements than conventional loans, VA loans are for veterans and RHS loans are for those in the rural areas.

Two types of rates are generally applied on home loans and these are fixed and adjustable rates. With a fixed-rate loan the rate of the loan will remain the same throughout its term, while with an adjustable-rate loan, the applicable rate on the loan will vary at different points in time during the term of the loan. Home loans may also have different terms too, that is, different length of time. To do an effective comparison then, each potential buyer will therefore need to compare the same type of loans with similar type of rates and terms.

In addition to this, potential home buyers will also need to compare the APR of each loan too in order to get the best loan rates. The APR (annual percentage rate) of a loan is different from the interest rate on the loan, since it typically takes into consideration all the other costs/fees that a buyer may need to pay on a loan with a specific lender. The APR will ensure that the potential homebuyer compares not just the interest rate of a loan but the actual cost of the loan too, APR is therefore ideal for comparing loans.

Potential home buyers may ask mortgage lenders for a Good Faith Estimate and a Truth In Lending Statement. The Good Faith Estimate will list all the costs/fees that are applicable on a given loan, while the Truth In Lending Statement will provide the APR for the loan. Some lenders may not include all the costs/fees listed in their Good Faith Estimates in their APRs, each potential buyer will therefore need to clarify this with their lenders in order to get some accurate home loan comparison for themselves.