Why is it important to compare home loans?

Buying a home is likely the biggest financial decision you will ever make. Given the average price of today’s homes, you could be borrowing hundreds of thousands of dollars. With that much money at stake, it is very important that you shop around and compare home loans so that you get the best loan for your particular financial situation.

When looking for a home loans, you’ll want to compare the total cost of the loan rather than just a few individual components of the loan. Many consumers fall into the trap of focusing solely on the monthly repayment amount or the interest rate of the home loan. While this information is certainly important, it does not give you a complete picture of the loan. By not including the term of the loan, the amount of the loan, the lender’s fees and any prepayment penalties in your decision, you could be on the wrong side of thousands of dollars.

Every home loan has a cost, and all of the factors outlined above help determine that cost. Two lenders may be offering you the same amount for approximately the same monthly payment, but a host of other fees could make one loan a much better deal than the other. It is only through careful comparison that you can make that judgment.

Another reason to compare home loans is to learn about the different options and loan features available to you. A home loan offset account, for example, could save you thousands of dollars over the life of your mortgage. Not every lender offers options such as offset accounts and redraw facilities. Taking the time to compare the various home loans on the market is the best way to learn about these variations and unique features.

Home loans come in all shapes and sizes. Although fixed-rate loans, adjustable rate loans, no deposit loans, and non-conforming loans are the most popular, they are not the only loans available to you. With so many loan type possibilities, it is important that you research, compare and understand what you are getting. Borrowers have so many choices beyond the standard fixed interest rate and variable interest rate home loans.

Tags: Home loans

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