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When shopping for a mortgage loan it can be very frustrating
so we have looked into some tips that will help you get the
loan you want and what to do once you have the contract in
hand for your home. Print this out and show it to your lender
if you feel the need. When I bought my first house I was very
rushed and never really looked at anything just signed millions
of papers until my wrist almost fell off. My credit was considered
“ok” but was not perfect to my surprise. I found
out that I owed money for some hospital bill that I didn’t
even know was mine. Therefore, since my credit was not the
best, it gave the lenders an opportunity to take advantage
of me. Yes they are nice people but when it comes to signing
away at a loan and my money is at stake that’s a different
story. I found out they had added in extra mortgage costs
and even tried to gouge me with points to “lower”
the long term rate. In comparing my mortgage to mortgage rates
online I found you have to compare more than just the interest.
You must compare interest, discount points, etc. Below we
will address some of these concerns:
1. Shop around!
Check out our variety of lending partners and get a quote
from each lender in our comparision
shopping chart. There are more than 1,000 companies who
are doing mortgage lending or brokering in each state. By
spending some time comparing rates, fees and services, you
may be able to save yourself thousands of dollars by avoiding
loans with high-rates, high-fees, or both.
2. As you shop, compare interest rates (fixed rate
or variable), fees, and find out if they charge prepayment
penalties (most do not). I got stuck myself into
a loan from World Bank that charges a prepayment penalty because
at the time of my loan I did not know of the resources online
that allow you to shop and compare. The market rate for borrowers
with good credit varies from time to time. If you think that
rates will increase, you may want to consider "locking
in" an interest rate. If you do, we suggest you obtain
written confirmation of that lock and pay attention to when
the lock expires. Origination fees seem to be about 1% of
the loan amount. Some unsuspecting and uninformed consumers
have paid as high as 17% for origination/broker fees. For
a $100,000 loan, that means paying $17,000 when $1,000 to
another company would have provided a loan with terms at least
as favorable. If you have poor credit, you will likely have
to pay higher rates and fees, but by shopping around you may
still be able to find a loan with reasonable fees and rates.
3. Avoid companies which encourage you to commit
fraud by claiming a business purpose for a loan which is actually
for personal, family or household uses. This seems
to be done by some companies to avoid a rescission period
(a 3-day "cooling off" period in which a borrower
may cancel a loan secured by his/her primary residence) and/or
to circumvent the requirement to provide important disclosures.
If you have a financial emergency (such as imminent foreclosure),
you may waive your right of rescission to speed up the process
without any need for deceit.
4. Beware of statements such as "No cost to
you". Some mortgage companies use that expression
to mean no out of pocket costs at closing and then they will
add closing costs to your loan balance rather than require
you to provide cash at closing. Make sure you understand all
the fees you are paying, whether added to the loan or not,
you are the one to make sure you are getting the best deal.
5. Avoid churning your mortgage loan. Usually,
each time you refinance you incur closing costs and non-refundable
fees. Don't allow a mortgage company to talk you into rewriting
your mortgage loan just to get a little cash out. Many people
find that they have added $7,000 or more to their debt in
order to obtain $4,000 in cash. An example of this is second
6. Avoid quicksand loans. They contain
combinations of the following attributes: short-term, high
up-front-fees, high rates, balloon payments, excessively high
late fees, prepayment penalties. Just as quicksand can swallow
up your body, quicksand loans can swallow up any equity you
may have and ruin your financial position.
7. Once you've applied for a mortgage loan, make
sure you get a Good Faith Estimate of costs (the
company you apply with is required by federal law to provide
you one). Make sure you understand and are willing to pay
all of the fees listed. Take it with you to the loan closing
and compare it with the Settlement Statement -- item by item
-- to make sure that the actual fees as shown on the Settlement
Statement are in line with the estimates shown on the Good
Faith Estimate. If there are any significant differences,
get them resolved before you sign the papers. If the mortgage
company will not change the terms as you desire and you wish
to cancel the transaction, you should consider some options:
If your loan is a refinance or a second mortgage on your primary
residence, find the Notice of Cancellation, sign the essential
loan documents, then cancel the transaction using the Notice
of Cancellation. If it is not a refinance or second mortgage
on your primary residence, don't sign the documents.
8. Review in detail the terms of the note before
you sign it. Know what every paragraph means.
9. Beware of prepayment penalties. If you
have good credit, there is no need to sign a loan which contains
any significant prepayment penalty. Often they are disclosed
on the 2nd page of the note in a paragraph starting "You
may prepay this loan anytime...." Later in the paragraph,
some documents obligate you to pay the lender 6 months worth
of interest just to pay the loan off early. On a $100,000
loan, at current rates, such a fee would be approximately
$4,000. I made this common mistake myself by thinking I would
not want to pay it off.
10. Be skeptical of promises a mortgage company
may give as to how quickly you may be able to obtain a loan.
Many borrowers have been told that their loans would close
within a particular time. In anticipation of the new loan
they have not made payments on pre-existing debts. After several
delays, borrowers have delinquent existing loans with no funds
from the new loan. Some mortgage companies have then pulled
new credit reports and charged the borrowers higher fees and
a higher rate because of the delinquent loans which resulted
from delays caused by the mortgage company.
11. At closing, pay special attention to the Settlement
Statement, the Note, and the Truth-in-Lending Disclosure Statement.
Make sure you understand each paragraph of those documents.
Each of the many pages of those documents and others are given
for specific reasons, usually to comply with specific laws
requiring them to provide you with important information.
Understand what those documents are trying to tell you, and
why you are signing them.
You also may want to find out what your broker is charging
you to find lenders or banks. Their added fee could be around
3% or more..
Have good credit
or bad credit and want to find out the far lowest rates you
can? Search our database of over 1,000s of lenders
looking to bid you the lowest price possible. Search
Mortgage Loans Now!
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