There was a very helpful article in the WSJ Saturday, titled Getting Wise to Mortgages. It contains lots of advice and tools to help consumers learn about mortgages, and to shop for the most competitive rates:
"A few entrepreneurs are developing new tools to help home buyers tackle
one of the most confusing projects they face: figuring out whether a
mortgage is a fair deal.Comparison-shopping for mortgages has long been a job only a masochist
could love — a world of "points," "ARMs" and a barrage of surprise
fees. In recent years, it has become tougher amid the proliferation of
complex new interest-only mortgages and others designed to enable
buyers to delay more of the pain of paying off that debt.Now, as interest rates climb, it is important for mortgage borrowers to
aggressively shop around for the best terms. Over 10 years, a
difference of just 0.125 percentage point on the mortgage rate on a
$500,000 loan can rack up more than $6,000 in extra interest payments.The problem for borrowers is that lenders have a vested interest in making it tough to compare rival offerings.
"The general public, they think they know how to shop for mortgages,"
says Mike Stoffer, who owns a mortgage brokerage in North Canton, Ohio.
"They have no clue."
The Journal recommends several sites to help become more educated:
• The Mortgage Professor: One of the quirkiest tools available is a Web site by a maverick retired finance professor who has made a hobby of skewering mortgage lenders. The site is a compilation of tutorials, calculators and a glossary defining everything from "balloon mortgage" (one that is payable in full at an early date) to "right of recission" (your right to back out of a refinancing within three days of closing).
• The best defense for consumers is to do some research before starting to shop around. For instance, sites including Bankrate.com and HSH.com not only explain basic terminology, but also provide a range of tutorials and tools.
The Mortgage Professor ranked the single-lender web sites worth shopping on his own scale; These were the top 3 ranked sites:
Amerisave.com (47)
Eloan.com (46)
Mortgage.com (42)
Sources:
Getting Wise to Mortgages
New Tools Help Decode Jargon, Sniff Out Deals;
JAMES R. HAGERTY and RUTH SIMON
THE WALL STREET JOURNAL, February 4, 2006; Page B1
http://online.wsj.com/article/SB113901128014664824.html
The Mortgage Professor: Mortgage Advice and Counsel
http://www.mtgprofessor.com/
It’s interesting reading the mortgage rate averages and estimated loan costs in the Sunday paper. Short-term and long-term rates are so close together.
Great summary and great list of resources. The quote from Mike Stoffer is priceless. Shopping for mortgages is worse than shopping for a car. The right mortgage broker can help – it’s like having a good lawyer on your side. Or if you like, a necessary evil.
For the Canadians out there, you have to use Canadian mortgage calculators. There are significant differences in mortgages between Canada and the United States so the resources above can only take you so far. Most of the general cautions will hold.
Very interesting site I congratulate