When people intend to refinance their current mortgages or buy a home, they usually look for lower interest rates. But everyone is not lucky enough to get the same mortgage rate.  It is strongly emphasized to shop around to get the best deal. Such decisions should not only be based upon lowest rates. Instead, there are various other factors that are equally important in comparing mortgage rates.

Why Compare?

Today’s economic market proves that mortgage brokers and banks need your business which makes you acquire a powerful position. When you research the market to compare different mortgage rates, you get authority to utilize the best deal available in the market.

Points or Par Rate: The upfront fee that a potential homeowner pays to a lender at the time of closing is called a point. By contract, it is equal to almost one percent of the amount of loan. The purpose of charging a point is to increase or decrease the interest rate on the loan. Some lenders offer you the same loan product with diverse points and rate combinations where you have the freedom to choose the best option.

The lender’s par rate is the interest rate that is related to zero points. Getting an interest rate that is lower than par is much easier if you pay a point at the time of closing or finance it as a part of your loan amount. However, if you have a credit toward your closing cost, you get negative points. It implies that you agree to an interest rate that is greater than that of par.

Closing Costs: Closing costs generally include transfer charges, loan related charges, and contract and title charges. The combination of these charges can add tens of thousands of dollars to the net cost of your loan. When comparing different mortgage rates, it is important to compare various other kinds of fees that lenders charge.

Lock-in Period: It is the period during which you cannot pay off a loan prior to your schedule without paying penalties. During this period, the lender maintains the agreed interest rate, regardless of the changes in the market rate. The common lock-in periods are of 30, 45, and 60 days. However, some lenders also offer shorter periods of time as lock-ins. Generally, the price of a loan is higher for longer lock-in periods.

According to some financial experts, the proper combination of points, low rates, and affordable fees make a mortgage worthwhile. While opting for a particular mortgage, you should not only consider the interest rate, but also various other costs involved in the process of obtaining the loan.