How to Begin to Shop for Your Perfect Mortgage. - By: Scott Staudt

It is a foregone conclusion that every one shopping for a home loan wants the best rate and fee schedule as well as lowest payments. But how do you make sure you get the loan that will guarantee all of these?

First you have to choose the type of loan that you think your mortgage should be. The type of loan will normally be a choice between fixed and adjustable.

The difference between these types of loans is that a fixed rate mortgage has a rate that never changes. An adjustable rate mortgage "adjusts" periodically over the life of the loan, which may be one, three, five or more years.

The advantage of an adjustable rate home loan is that the rate set is at a lower rate than longer, fixed term mortgages. If you, like most home buyers today, don't expect to be living in the same house for too many years, long term fixed rate home loans are not as interesting as lower rate adjustable mortgages.

However, a fixed term, typically thirty year, home loan would probably pay off if you expected to be in the same home for an extended length of time.

After the decision regarding the kind of loan you want, you need to do a rate comparison, either on the phone or online. It is imperative that you note fees as well as rates when you are doing this comparison. Many times banks will have lower published rates and then sock borrowers with a lot of fees. Once you have this information from different sources, you can make a list to compare.

For best results, try to have at least three banks for comparison. It is worth the effort to put the time into getting as much information as possible. This is a maor investment, you want to get it right.

Now you can get in touch with the lowest rate banks and see if you can get a loan commitment. It is important to give the most current and accurate information to potential lending institutions. It will all be verified over time by a third party.

Just because they advertise home loans doesn't mean your application will be accepted. Lenders often have other issues to deal with. They may have to have a particular mix of mortgages in their loan portfolio so that they can satisfy banking regulatins.

When you have some tentative approvals, start to inquire with family and friends to see which bank is preferable.

Your own experience with the agent is also important; if you don't feel comfortable with the agent, or he doesn't seem knowledgeable or is not willing to take the trouble to answer your questions, you are not going to be happy with the relationship.

Pick the lending institution that meets your criteria and request for a pre-approval. If you shop with such a letter, you will have an easier time in choosing a house. You will be asked to supply documents to confirm the information you give on the application.

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