Most people know it’s important to compare mortgage rates before they purchase or refinance a home. Some may even know to compare fees, points and other costs associated with purchasing or refinancing their home but, there are some things you didn’t think about or just don’t know. Here they are:
· You may not be able to get or even want the advertised rate. The super low rate may be for a 2-week lock in period. Unless the lender can guarantee you will close escrow in 2 weeks, you need to find out what rate you can get for a 30-45 day interest rate lock, or whatever you feel comfortable with.
· You should try to avoid having your credit run until you’ve decided between 2-3 lenders. You can request a pre-approval from 3-4 mortgage companies, some of whom will get rates quotes from several lenders and give you the best 4, giving you a total of 10-12 quotes. Note that these are only estimates if they haven’t run your credit. Be sure to read the terms for the pre-approval estimate.
· Ask the lender if they will provide your credit score when they do run your credit. You should have an idea of what it is, but it’s nice to know what the recent score is as this will affect the interest rate you get.
· Beware of the “no cost loan”. It will probably have fees included in the loan, increasing the interest rate and simply not cost you any out of pocket costs. Even paying a ¼ of a percent higher is not worth it to save a few hundred dollars or even a thousand. If you don’t have the money, try to get it somehow if you can.
· Ask for all the fees you will have to pay before having lenders run your credit. Some may not want to give it to you. The good/honest ones with nothing to hide will, at least as much as they can before running your credit. Some fees may depend on your credit score.
· Be sure you can prepay the loan or have a bi-monthly plan set up if you want to without additional charges.
· Find out how often they re-calculate the outstanding mortgage interest. You want them to do it daily or at least monthly, but definitely not yearly. What if you want a bi-monthly mortgage later on or you get a large bonus and want to apply a little to the mortgage; if they don’t re-calculate often, you’ll pay the interest on the old balance and not the new one. This can add up if it’s for a whole year.
· When shopping online for mortgage rates, be sure you are on a secure page when sending your social security number over the Internet. You should see a small yellow lock in the lower left corner of your browser window and an “s” next to the “http” in the URL area of the browser window.
· Another tip when shopping online for mortgage rates, find out if they process everything online and send you an email or if they have to call you with the quote. Try to get the former. You don’t really want a bunch of people calling you to try to talk you into a loan. You do want the option to call them and ask them questions without having to wait.
· Sometimes you can get a small percentage point off if you have your mortgage automatically deducted from your checking account. This is a good thing, just be aware with whom you are dealing with and what you are signing, read the fine print.
Buying or refinancing your home is important and will affect your life for a long time, so don’t take it lightly, be careful and be prepared, you’ll be glad you did.
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Sandra Wellman is the owner of freefinanceinfo.org, where you’ll find over 50 articles on credit repair, how to get out of debt, identity theft, www.freefinanceinfo.org/home-loans-refinance.htm”>home loan refinancing reverse mortgages, auto & student loans and more.
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