Mortgage Shopping Guide

The purpose of this report is to act as a guide. Buying a home may be one of the most important financial decisions you make in your lifetime. The 7 questions presented below can help you avoid making a costly mistake, and possibly save you thousands of dollars in interest, points, and fees.
This mortgage shopping procedure can help you narrow down which lender and mortgage program is best for you.
I hope this information will enable you to make a smarter decision on financing your home.
 

Mortgage Lingo..

Before comparing mortgage programs, you may want to familiarize yourself with a few key words in the language of lending.

Terms.

The life of the mortgage, usually 15 to 30 years.

Points

A fee paid to the lender at the onset. One point equals 1 percent of the amount borrowed. In financing a house you expect to live in for many years, it's worth paying an extra point or two to get a lower interest rate.

Interest Rate

The rate quoted by lenders, useful in comparison shopping.

Annual Percentage Rate (APR)

The effective rate with points and some closing costs taken into account.

Payment

Usually made once a month, payments include interest and principal and usually an additional amount to cover real-estate taxes and homeowners insurance.

Closing Costs

The total expenses that must be paid at the real-estate closing. They include points, title insurance, and fees for the bank’s attorney, appraiser, and credit investigation.

7 Critical Questions To Ask Your Lender!

1) Are you a mortgage broker or banker?

What type of representation is offered to the loan applicant? Is your company Flexible? Efficient? Diverse? What type of expertise can I expect from your company?

2) Why should I use your company?

When you ask this question you want to find out the following:
the company reputation and long-term values,
what the company specializes in,
and what kind of guarantees the company offers.

3) When can I lock-in my rate?

(a) How long is the lock-in period?
(b) After I lock-in, if rates go down will I get a lower rate?
(c) Is there a lock-in fee?

4) How often does your rate change?

It’s good to know in advance how often the rate changes to make an accurate comparison of various mortgage programs. Also compare programs to determine how much your rate can change over the life of the loan.

5) Can I get a written estimate of closing costs before I apply?

When comparing loan programs this information is invaluable. After you get the written estimate, call the lender back to go over the various fees and costs. Be sure all the costs are disclosed in writing.

6) Do you have a pre-approval program?

If you haven’t found a house yet, many lenders offer a pre-approval program. This is a written mortgage commitment for the maximum loan amount you can afford. All you have to do is find a house. It’s like shopping with cash. You negotiate better with the seller (which can save you thousands on the purchase price), and close faster.

7) How long will it take to get a written approval, and will you guarantee that?

Many lenders will promise good turn around times, but will they guarantee it? I’m sure you have heard all the stories about how long it takes to get a written approval.

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