Shopping for a mortgage loan can be overwhelming. Whether you are purchasing a new home, refinancing your existing mortgage, taking out a 2nd mortgage, or applying for a home equity loan, you need to do your homework first.

When comparison shopping for a mortgage loan you need to collect information from a variety of lenders including interest rates, annual percentage rates, terms, and lender fees. Ask your mortgage lender or broker for a detailed list of these items for each loan you are considering. You can easily locate this information on the Internet without going through a third party.

Compare mortgage loans of equal term lengths. It does not make sense comparing a 15 year mortgage to a 30 year mortgage unless you want to see the difference in your monthly payment amount. Look at the interest rates: does the mortgage come with fixed rates or adjustable interest rates? What is the term length of the mortgage? Will you be required to pay points up from to qualify for the loan? Are you going to be required to purchase Private Mortgage Insurance?

One of the items the lender should provide you is the Annual Percentage Rate for each loan offer. This figure factors in all fees and expenses for the loan and is a helpful way to compare the cost of borrowing from one mortgage lender to the next.

In addition to interest rate you should look at fees. Mortgages that do not have prepayment penalties are better offers than those that do. Mortgage lenders that require Private Mortgage Insurance should be avoided as this could add hundreds of dollars to your monthly payment amount. Other favorable terms to look for are loans that do not require escrow for taxes and insurance. Good escrow companies are difficult to find and selecting a lender that does not require escrow could save you a lot of aggravation and headaches.

As you can see a good mortgage offer contains much more than favorable interest rates.

To learn more about spotting a good mortgage offer when you see one, sign up for a free mortgage help guide. It is helpful to learn mortgage terminology and how the mortgage industry works prior to shopping for a mortgage loan. If you skip this important step, how will you recognize a good deal when you find it?

Louie Latour

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of “Five Things You Need to Know before Refinancing Your Mortgage,” which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit RefiAdvisor.com.