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How to Compare Mortgage and Home Loans?
- Term. Usually mortgage terms are 30, 20 and 15 years. But 15 mortgages have become more popular. Some mortgages have fixed rates for the entire term, some have variable rates that can change monthly or yearly, and others have a fixed rate for a certain number of years followed by a variable rate. And interest rate you pay is proportional to the loan term.
- Rate. You'll want to know the interest rate and the annual percentage rate (APR). The APR adds in points, fees and certain other charges, all expressed as a yearly rate to help you compare loans. If the rate is variable, ask how often it can change and how high your payments could go. Some flat rate loan looks cheap but they counts very expensive when you include the owner all charges, so don't be a flat rate fool.
- Points. A "point" is 1% of a mortgage. Typically, the more points the borrower pays, the lower the interest rate. But if you plan to sell in just a few years, you won’t recoup the upfront cost.
- Fees. These include origination or underwriting fees, broker fees, transaction costs and closing costs. Many reputable lenders will give you the estimate in advance. In any case, many of the fees are negotiable. Interest rates for a "no cost" or "no fee" mortgage will be higher.
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