A Current general market assumption is that millions of mortgage holders are paying extra money every year as lenders are raising the interest rate unevenly, though basic rate remains at a very low level. It is increasing the burden of the common people.More than half percent of the borrowers are concerned about the fluctuating mortgage rates. They think that varying mortgage rate can have a negative impact on their financial situation. At present, more than 15% is already struggling to repay loans.
Along with market conditions, improper financial planning also leads to face serious consequences. While 90% of normal shoppers visit shops to compare rates before buying a product, more than 40% of the mortgage shoppers approach only a single lender for their needs. The mortgage rates fixed by them will only be taken into consideration and sign the best mortgage deal. Due to this they are not getting the best mortgage rate available in the market. We can point out so many negative side of this practise. First is that most of the borrowers are unaware of the fact that mortgage rates vary with different lenders. Most of them believe that it is the Federal Reserve that fixes mortgage rates, while in reality it is mortgage lenders who fix these rates. As they think mortgage rates are almost similar with each firm they won’t spend time in comparing the rates. They will agree with whichever mortgage firm that comes in their way.
Second factor is the misconception regarding loan approvals. Most of the borrowers have the opinion that lending process is a very complex one and it is big headache to tackle with all such things. It is better to say OK to one who approves the loan amount within short time. People used to get confused with complexities surrounding mortgages and become a bait of neck cutting mortgage lenders.
Third factor is the lack of knowledge of the mortgage industry and the terms and conditions. Mortgages are considered as a commodity and each mortgage lender provides services which differ from other lenders in terms of rate, fees, tenure, points, and different lending standards. Most of the borrowers don’t know how to exploit the various possibilities available in the mortgage market. If they have approached more than two lenders and compare the rates and points offered by each it can give a good hand.
Fourth factor is a wrong type of mortgage chosen in the prevailing general economic condition. Mortgage rates will be fluctuating based on the existing economic conditions. Those who don’t know much about lending rates and which lender could give a best buy, there are chances for mortgage loans to become a financial burden.
If you are planning for a mortgage do some preparations like collecting details about potential lenders from your neighbours, friends, newspapers or internet . If you can afford a mortgage broker then it is better to appoint one. He will shop for you and bring in front of you a list of lenders with their lending rates. While some lenders will have fixed lending rates, some will be ready to adjust rates. Call each lender in personal and get accurate quotes. Compare the quotes and strike the best that suits your requirement and budget. That’s all!
Though mortgages are gaining importance in everybody’s life, it still has a different approach by different lenders in the market. This is in the terms of interest rates, commission fees charged by mortgage brokers, terms and conditions on repayment process etc.
