 |
The 13 Secrets Lenders don't Want You to Know |
Secret #3
It is important to ask different lenders the same questions about the same loan amount so you can compare their rates and fees effectively. The following information is important to get from each lender and broker:
Rates
- 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, and keep in mind that when interest rates for adjustable-rate loans go up, generally so does the monthly payment.
- If the rate quoted is for an adjustable-rate loan, ask how your rate and loan payment will vary, including whether your loan payment will be reduced when rates go down. And ask about the index and margin the adjustable rate mortgage is tied to.
- Ask about the loan's annual percentage rate. 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. But do not rely 100% on the APR given. Many brokers incorrectly calculate the APR, so it really is not the ultimate comparison tool the government wants it to be.
Points
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 actually know how much you will have to pay.
Fees
A home loan often involves many fees. Every lender should be able to give you an estimate of its fees. The Secret most mortgage companies don't want you to know is that 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. This may, or may not be, a good or bad thing depending on your circumstance.
Save money on your mortgage by receiving a free, no obligation mortgage analysis from www.BlueFinancial.net
- Ask what each fee includes. Several items may be lumped into one fee.
- Ask for an explanation of any fee you do not understand. Some common fees associated with a home loan closing are listed on the Mortgage Shopping Worksheet in this document.
Secret # 4
Some lenders require 20 percent of the home's purchase price as a down payment. However, The Secret most mortgage companies don't want you to know is that many lenders now offer loans that require less than 20 percent down - sometimes as little as 0 to 5 percent! Ask you broker if this type of program is offered. Private Mortgage Insurance usually requires the homebuyer to purchase Private Mortgage Insurance (PMI) to protect the lender in case the homebuyer fails to pay. When government-assisted programs such as FHA (Federal Housing Administration), VA (Veterans Administration), or Rural Development Services are available, the down payment requirements may be substantially smaller.
Save money on your mortgage by receiving a free, no obligation mortgage analysis from www.BlueFinancial.net
- 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 PMI is required for your loan,
- Ask what the total cost of the insurance will be.
- Ask how much your monthly payment will be when including the PMI premium.
- Ask how long you will be required to carry PMI
1 | 2 | 3 | 4 | Continue
