When you go to buy your first home it can be a frightening experience. Not only are you committing to what will be the largest financial obligation of your life you’ll be bombarded with words and phrases that may seem foreign to you. To be in the best position possible to negotiate the best sales price and the best mortgage terms you have many things to consider. Price Is Only One Consideration All too often people concentrate solely on the interest rate of their loan. There are many costs associated with a mortgage loan and some lenders will charge a higher cost for these services than others. When you factor in these costs suddenly your costs have risen way above what you had expected. Some lenders will charge a fee; often call a loan origination fee, loan discount fee or simply loan points. It’s often hard to know what the better program is for you an interest rate of 5% with no points or a loan rate of 4.875% with 1 loan point added on. Sure your payment will be lower with the lower interest rate but if factor in the upfront cost it may not be so advantageous. Instead of concentrating on the interest rate ask what the annual percentage rate or APR is. All lenders are required by law to disclose the “true costs” of their loans as reflected in the APR. This will allow you compare apples to apples and make an informed decision. If you have the additional money to pay an upfront charge you very well may want to do so, but if you’re looking to keep closing costs at a minimum and are able to afford the slightly higher rate then that’s the way you should go. Look At the Good Faith Estimate Once you have your signed contract for Sanibel Island property and you shop around for a mortgage loan be sure to get a Good Faith Estimate from each mortgage professional you see. There are many fees and services associated with a mortgage loan such as appraisal, survey, documentary stamps, intangible tax, title insurance and the list goes on. The Federal Government requires lenders to disclose these fees on a standard reporting form to make comparisons easier for the consumer. Don’t just accept the papers and put them aside. Look at them carefully, compare them against each other and ask questions about the fees and charges that you don’t understand. Fixed or Adjustable Lots of times people focus strictly on the fixed rate loan programs when in actuality that may not be the best choice. If you plan to move or pay off the loan within the next few years you may want to consider an adjustable rate loan. Many times when people purchase real estate on Sanibel Island they have a home up North that they plan to sell or they may be buying a property with the desire to sell it in a couple of years and move to a larger home or condo on Sanibel Island. You usually pay a premium for a fixed rate loan and there is no need to pay this premium if it’s not to your advantage. Be sure to ask for all the mortgage options when you discuss your loan needs with your mortgage professional. So whether you’re a first time buyers of real estate on Sanibel Island or have many transactions under your belt you’ll want to shop carefully for your financing. Know the terms that used and what they mean. And most important, don’t be afraid to ask questions.