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More Information
Second Mortgage
Why Take Out a Second Mortgage?
Traditional Second Mortgage
Home Equity Line of Credit (HELOC)
Preparing Your Credit
Preparing to Apply
Understanding Fixed Rates
Understanding Adjustable Rates
Shopping for a Lender
Locking in a Rate
Understanding Points
High-Interest Debt: A Way Out
Paying for College
Home Renovation
Using the Internet to Research
Payment Comparison
An Affordable Monthly Payment
Private Mortgage Insurance
HELOCs and Monthly Payments
The Role of the Loan Officer

Shopping for a Lender

With so many lending institutions competing for each consumer’s business, it can be easy to get confused about which lender is right for your situation. Whether you are surfing the Internet, browsing through your mail, watching television or listening to the radio, chances are sooner or later you will hear or so an advertisement for a mortgage lending institution.

Most of the marketing material produced by lending institutions focuses on low rates. Slogans like “best rate guaranteed” or “lowest rates in town” can sometimes tempt home owners into thinking that the interest rate on their second mortgage loan is all that matters, and that their mission as an informed and proactive consumer is to focus only on obtaining the lowest possible rate.

One major drawback to this approach is that it is not realistic to base your mortgage loan shopping on the interest rates advertised by lenders. Keep in mind the lender has no obligation to actually give you a loan at that rate, each consumer is different and there is no way for a lending institution to know, without having access to certain documents and information, which specific interest rate for which you qualify.

Therefore, while the advertised interest rate may indeed be available to some consumers some of the time, there is no guarantee that they will available to you. Be cautious in dealing with any lending institution that is eager to quote rates without first obtaining the relevant information.

Some lending institutions also tack on fees and other charges which reverse the implied incentive of their “low” interest rates. Working with a lender whose reputations you know and trust is always a good mood.