Be wary of balloons and ARMS. (Adjustable Rate Mortgages) Most borrowers are much better off with a 15 or 30 year fixed rate loan. Your home payment could increase drastically in the future.
Beware of internet lenders and mortgage brokers. Choosing the wrong lender can cost you thousands in fees and extra interest you shouldn’t have to pay. If you have a relationship with a local credit union, give them a call first.
Take your “Good Faith Estimate” to a lender you trust. If you are about to be taken advantage of, your Mortgage Loan Officer will be able to tell within seconds. If you do not receive a “Good Faith Estimate” and “Preliminary Truth-in-Lending” disclosure within three days of your application, USE ANOTHER LENDER!
Cut your term and save THOUSANDS. (A 30 year fixed rate loan on $200,000 at 6.5% will cost you $141,000 more than a 15 year loan at the same rate).
Don’t be afraid to WALK AWAY from a closing if you are being taken advantage of. Make sure your rate is the same as what you were originally quoted and make sure your closing costs are reasonably close to those disclosed on your “Good Faith Estimate”. Unscrupulous lenders are hoping you will be too scared to WALK AWAY.
Ask Questions. Don’t be afraid to ask “stupid” questions. The only stupid question is the one you don’t ask
Be Represented. It is a good idea to have professional representation when you buy a home. A good attorney or realtor does not charge much for this service.
Know your lender. Internet lenders and some brokers are notorious for having closings chocked full of surprises. Use a Credit Union mortgage lender you can trust.
Arrive at your Closing Prepared. A good mortgage lender will take care of this step for you.
Watch your debt load! An excessive debt load could affect your interest rate or could even result in your mortgage loan being denied altogether.