Things You'll Need:
- Means to do mortgage research
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Step 1
Not having a relationship with a lender - If you don’t have a relationship with a qualified mortgage lender you are much less likely to find qualified advice when the need arises for a home loan. Also, time invested in a relationship with a lender will benefit you when interest rates go down if you are one of the many people trying to refinance your home.
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Step 2
Not knowing if the lender is qualified – Many home buyers don’t take the time to find out about the background of the company or individual with whom they are dealing. Because you are about to make one of the most important financial decisions you may ever make, check the loan officer’s credentials.
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Step 3
Not knowing how to shop for a mortgage – Investigate lock options. There are options that allow you to lock in the rate and points for a fixed number of days. Ask about the annual percentage rate, miscellaneous fees, and the variety of programs available. For example, ask about options for avoiding mortgage insurance.
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Step 4
Not knowing how finance choices will affect your economic gains or losses – Many home buyers do not know that there are options which may require less of a down payment or closing costs, or how the amount of down payment may affect their overall rate of return if the home appreciates. The longer you stay in a home without refinancing the original mortgage, the more likely you will see a gain on any points you pay. Refinancing or selling in a short period of time, will result in a loss on any points paid. You should research how to calculate the time frame necessary to break even on the dollars invested in points.
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Step 5
Not knowing or considering several mortgage options – Consider various mortgage options that may fit your situation, such as buydowns, long-term adjustables and 20-year mortgages. You should work with a professional to evaluate which option is best for you in your present economic situation.
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Step 6
Not knowing that refinancing extends the mortgage term – During a personal economic crisis you may need to refinance your home to alleviate the pressure of an unaffordable monthly payment. But, here is something to consider. Every time you refinance purely for a lower rate and/or payment, you stretch out the mortgage’s term and slow down the process of building equity.
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Step 7
Not knowing how the mortgage approval process works – You should obtain a mortgage approval first. If you obtain a mortgage approval first it increases your bargaining power with the seller. This also benefits you if problems arise during the approval process because you will be able to confront them up-front with plenty of time if you haven’t signed a contract. If you sign a contract first and a problem arises, you will be pressed to resolve it before the settlement date.
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Step 8
Not knowing what to ask a lender about services offered – Ask if the lender offers quick approval programs that will render a decision in a few days? Does the lender process and approve loans with their own staff or send their loans to other lenders for processing and/or approval? Many lenders are much more likely to service the loans they close while others sell most or all of the servicing. Additionally, a smaller broker that sends your loan to a larger lender might offer you a wider range of programs than a bank. The important thing to be aware of are the services that are available and that tradeoffs must be made in order to make a final decision.
Comments
jabinhim said
on 12/31/2008 Thank you Scarlett and nice to meet you. I've added you as a friend.
Scarlett9284 said
on 12/31/2008 Good information, thanks!