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How Do I Compare Offers?

When you’re ready to start comparing offers, the first step is to consider what’s most important to you: Minimizing cash to close, having the lowest monthly payment, or getting the lowest total cost over 5 years. Then you want to collect all of the same information and line them all up to make an apples-to-apples comparison.

Beazer’s Mortgage Choice helps our customers quickly facilitate these comparisons. This service is exclusively available for Beazer customers who have found their perfect home.

Line up the information

Find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. Ask for information about the same loan amount, loan term, and type of loan so that you can compare the information. The following information is important to get from each lender and broker:

1) Interest Rate

  • Ask each lender and broker for a list of its current mortgage interest rates and whether the rates being quoted are the lowest for that day or week
  • Ask whether the rate is fixed or adjustable. Keep in mind that if interest rates go up for these loans, so do the monthly payments
  • If the rate quoted is for an adjustable-rate mortgage, ask how your rate and loan payment will vary, including whether your loan payment will be reduced when rates go down
  • Ask about the loan’s annual percentage rate (APR). The APR takes into account not only the interest rate but also points, broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate.

2) Discount Points

Discount Points are fees paid to the lender or broker for the loan and are often linked to the interest rate; usually the more points you pay, the lower the rate.

  • Check your local newspaper for information about rates and points currently being offered
  • Ask for points to be quoted to you as a dollar amount — rather than just as the number of points — so that you will know how much you will actually have to pay

3) Fees

A home loan often involves many fees, such as loan origination or underwriting fees, broker fees, and settlement (or closing costs). Every lender or broker should be able to give you an estimate of its fees. Many of these fees are negotiable. Some fees are paid when you apply for a loan (such as application and appraisal fees), and others are paid at closing. In some cases, you can borrow the money needed to pay these fees but doing so will increase your loan amount and total costs. “No cost” loans are sometimes available, but they usually involve higher rates.

  • Ask what each fee includes. Several items may be lumped into one fee
  • Ask for an explanation of any fee you do not understand

4) Down Payments and Private Mortgage Insurance

Some lenders require 20 percent of the home’s purchase price as a down payment. However, many lenders now offer loans that require less than 20 percent down — sometimes as little as 0 percent on certain loans. If a 20 percent down payment is not made, lenders usually require the homebuyer to purchase mortgage insurance (MI) to protect the lender in case the homebuyer fails to pay. Ask about the lender’s requirements for a down payment, including what you need to do to verify that funds for your down payment are available.

  • Ask your lender about special programs it may offer.

If MI is required for your loan

  • Ask what the total cost of the insurance will be
  • Ask how much your monthly payment will be when the MI premium is included

Obtain the Best Deal

Once you know what each lender has to offer (after you receive a Loan Estimate), negotiate the best deal that you can. On any given day, lenders and brokers may be able to offer different prices (interest rates or fees) so make sure they put their best offer forward.

Have the lender or broker provide all the costs associated with the loan via a formal Loan Estimate. Then ask if the lender or broker will waive or reduce one or more of its fees or agree to a lower rate or fewer discount points. You’ll want to make sure that the lender or broker is not agreeing to lower one fee while raising another or to lower the rate, charging discount points, etc.

There’s no harm in asking lenders or brokers if they can give better terms than the original ones they quoted or than those you have found elsewhere.