Requesting an online mortgage price quote is one of the simplest ways to compare different loan programs. However, before you submit a request with a mortgage broker or lender, it's crucial that you know what information to look for on a price quote.
1. Mortgage Interest Rate
The interest is the rate charged to the borrower. Mortgage lenders and brokers offer a variety of products with different types of interest rates. For example, the price quote may include a quote for an adjustable rate mortgage, in which the rate changes periodically, or a quote for a fixed rate mortgage. If the rate is adjustable, the price quote may also include information such as the initial rate period and frequency of the adjustment period.
2. Mortgage Term
The term is the time used to determine the monthly mortgage payment. The average home loan term is 30 years. However, home buyers can select other alternatives such as a 15-year mortgage, 40-year mortgage, or a balloon mortgage. Unless a shorter term is requested by the borrower, lenders always calculate mortgage payments based on the standard 30-year term.
3. Pre-Payment Penalty
The majority of bad credit home loans include a pre-payment penalty, in which the borrower is charged a fine for paying off the mortgage early. The charge is typically 3% of the loan balance. After 3 - 5 years, mortgage lenders get rid of the pre-pay penalty, which allows the homeowner to sell or refinance the property without paying a fee.
4. Origination Fee
The origination fee is an upfront fee that lenders charge borrowers. Standard origination fees are 1% of the loan amount. For example, if the home price is $165,000, the mortgage lender should charge approximately $1,650 for the loan origination. If the lender or broker charges a higher percentage, confront the loan officer.
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