A fundamental key to selecting the best loan is to consider total costs, not just the interest rate. This will include monthly payments and the cash required at closing.

Almost all mortgage loans require monthly payments of principal and interest. This is the amount indicated in monthly payment tables. However, this is only part of the total cost of the loan. There are other charges that must be paid “up front” or as part of the monthly payments.

When you apply for a loan, you are required to pay an application fee. This fee usually amounts to several hundred dollars. A portion goes toward obtaining information on your credit history so the lender can evaluate your credit. Another portion goes to pay for an appraisal of the home for assurance that the home is worth at least as much as you are paying. If the appraised value is lower, the amount of loan you are applying for may be reduced. The rest of the application fee goes to defray the costs of processing your application or toward the lender’s profit. More->