October 9, 2015 10:42 am
Aside from searching for the perfect home for you and your family, obtaining a mortgage that fits your needs can be just as time-consuming a process. Whether you’re a first-timer—or even a seasoned buyer—you shouldn’t simply walk into your local bank and agree to the first mortgage you’re offered. It’s also important that you don’t choose a lender simply because you worked with them in the past. No matter what the market looks like, getting the mortgage that works best for you begins with shopping around and doing your homework.
Before applying for a home loan, take the time to inspect your credit report to make sure the information is correct. While mistakes and outstanding debt can be fixed, the process will take time.
Once your credit report is in good condition, and it’s time to look for a mortgage, you’ll want to compare and contrast various mortgage brokers, mortgage lenders, banks and credit unions.
From there, narrow down your choices and take a closer look at your top few offers by examining the numbers more closely. Looking beyond the basics, you need to determine all loan cost information, not just the monthly mortgage payment and annual percentage rate. Check the cost of points in dollar amounts, broker fees, origination fees, underwriting fees, administrative costs, mortgage insurance, yield spread premiums, commissions, escrow and closing costs. Without these numbers, you won’t be able to make a fair comparison.
While most prospective buyers tend to think that a 30-year loan is the way to go, over the years, 15-year loans have continued to gain in popularity. However, in the end, the most important thing is to pick the loan that’s best for you and your family.
In addition to 15- and 30-year loans, prospective buyers can also choose between fixed-rate and adjustable-rate mortgages. If you’re interested in an adjustable-rate loan, you need to consider more than just the rate at the beginning of the loan period. It’s also important to understand and pay attention to the rules related to when and how often adjustments can occur, limits on what they could cost, as well as the loan’s ceiling rate. This is something that you should discuss closely with your lender.
If you happen to discover a better price with a different lender, but prefer one that you already know, don’t be shy about negotiating the terms, especially if you have a solid credit history. You may be able to lower the points, reduce some fees, eliminate some broker fees or even bring the rate down a small percentage.
Once you find the terms you’re comfortable with, lock it in, in writing, so that things don’t change. The lock-in should include the rate that you have agreed upon, the period the lock-in lasts, the number of points to be paid and a lock on as many other costs and terms as possible.
Finding and obtaining a mortgage may not be the most exciting part of the process, but it’ll set you on the path toward owning your own home, so do all you can to make sure you can live with the terms and payment conditions.
Published with permission from RISMedia.