This post is a must read for anyone considering purchasing a home be it today, tomorrow or next year. It is sound advice.
1. What is the loan's Interest Rate and Annual Percentage Rate?
Find out what the interest rate will be on your loan and the annual percentage rate (APR). The APR is a combination of the interest rate, points and other charges divided by the loan's term to give an annualized rate. It is the easiest way to properly compare loan costs.
2. How Many Points Will You Be Charged?
A point is one percent of the loan amount. Points charged are additional to the interest rate that is charged on the loan. A loan with a low interest rate and high points may cost you thousands more than one with a higher interest rate but low points. This is important because the number of points charged varies from lender to lender. You absolutely need this information.
3. What Total Closing Cost Fees are Charged?
Lenders will charge fees for their services to complete and close your mortgage. By law, closing costs must be disclosed to you within 3 days of the loan application, however, there are different avenues to calculating them. Some brokers will initially disclose closing cost figures which are very appealing, to get your business, only to provide much higher costs as your closing date approaches. Sneaky and its done quite often, be careful here.
4. Can I opt for a "Lock-In" Policy?
There may be an Additional Charge to Lock-In an Interest Rate and Discount Points. Several lenders offer a lock-in policy that guarantees you certain interest rates and points for a specified time period. The alternative to this is accepting the prevailing rate and points on your closing day. Since rates change daily, the one time lock-in fee may be able to save you thousands.
5. How Long Will it Take to Process My Mortgage?
Processing is the means by which your loan is prepared for approval. The time it takes to process a loan varies by the type of loan and lender. Loans can usually be funded within 7 to 10 working days. Since timing may be a factor, a lender with quick processing and funding capabilities will prove to be a very valuable asset for you all around.
6. Are You a VA Automatic or FHA Direct endorsement Lender?
VA automatic and FHA direct endorsement means that a lender has met all the government requirements for FHA/VA and the lender's underwriter has completed the mandatory education. An automatic or direct endorsement lender can approve or disapprove a loan just as if the loan had been sent directly to the regional FHA or VA office. (N/A for Canadians)
7. Can I Finance the Upfront Private Mortgage Insurance (PMI)
Premium into the Loan Amount? If your down payment is less than twenty percent of the sale price, to qualify, you will be charged PMI, an insurance premium to protect the lender in case you or someone else who assumes your loan defaults on the loan. Some lenders allow you to include the first years premium into the amount of the loan. Including this premium may be the difference when getting a mortgage by reducing your cash outlay.
8. Is There a Pre-Payment Penalty?
Normally you can prepay a loan without penalty if you notify the lender in writing that you are either selling or refinancing. There are exceptions. Make sure to ask about your mortgage, play it safe, you don't want a surprise later on.
9. What is the Lender's History?
It's important to rate your lenders reputation for speedy processing, knowledgeable loan service and meeting contract deadlines. You want to hire a mortgage broker who will treat you the way you want to be treated, and is not just looking for you to sign and get it done, make sure they are taking proper care of your needs. Your lender will be dealing with your hard earned money and home purchase, so you want to be confident that you have made the right choice.
10. What Do You Offer to the First Time Buyer? (If this is you)
Purchasing a home is among the most significant financial decisions anyone will ever make. Make sure you get all of the information you need on this, it may save you some money.
Have you noticed I always somehow wind up going back to the first time home buyer? It is because buying a home is such a HUGE Financial investment that you absolutely must be prepared. Keep in mind you can find excellent advice here, take a close look at what's available to you. And as always it's always no cost, no obligation.
Get out there....
Invest in your future.
Regards
Garret
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