Mortgage Information : Applying for a Mortgage
(This was Written by Craig Romero, Mortgage Analyst)
When applying for a mortgage, it’s important you get answers to the following questions. Be sure and print these questions out and take them with you when meeting with a potential mortgage lender. By taking the time to learn the answers to these questions, you can reduce or eliminate the chances of being taken advantage of. Thus, saving you thousands of dollars.
1. Will There Be an Additional Charge to Lock-In an Interest Rate and Discount Points?
Since rates fluctuate daily, Most lenders offer a lock-in policy that guarantees your quoted interest rate and points will not change for a specified number of days. Allowing you time to organize your documents and shop other loans before applying with this lender. By paying a one time lock-in fee you may be able to save you thousands if the interest rate rises during the time you are locked in.
2. How Many Points Will Be I Charged?
The answer to this question will vary from lender to lender. A point is calculated as one percent of the loan amount. Points charged are additional to the interest rate that is charged on the loan. A lender often makes his fees by charging points or to negotiate a lower interest rate. Be careful with this because a loan with a low interest.
3. What Will Be The Interest Rate & Annual Percentage Rate for This Mortgage?
The answer to this question will allow you to compare the loan costs of this particular mortgage with other loans you may compare against. Your loan APR is figured by combining the interest rate, points and other fees divided by the loan’s term to give an annualized rate. A low interest rate and high points could end up costing you thousands more than one with a higher interest rate but low points.
4. How Long Will it Take to Process My Mortgage?
Processing is the time it takes from the day you submit your application to the time your loan is approved. The time it takes to process a loan will vary for different loan types and among lenders. Normally loans should be funded within 7 to 10 working days, unless there is a problem with your application.
5. Will I Be Charged For Private Mortgage Insurance (PMI)? And If So, Can I Finance the Upfront Premium into the Loan Amount?
If you’re unable to put a 20% down payment on your new home, you will be charged PMI (an insurance premium to protect the lender in case you default on the loan). If you are charged this, find out if you can add these premiums into your financing.
6. What Are The Total Closing Costs?
Be sure and get this in writing within 3 days of applying for the loan. If they can’t provide this within 3 days…the lender has broken the law. When a list of closing fees are provided, be sure you understand each fee. Sometimes lenders will tack on unnecessary fees to boost profit. Lenders charge fees for the services incurred to process and close your mortgage. Also, make sure the closing costs that were presented to you in the beginning match the closing costs presented at closing.
7. Is There a Pre-Payment Penalty?
This is a penalty some lenders apply to your loan if you decide to pay off your loan early. Either by making bi-weekly payments or 1/12 extra payments (see table of contents). This is important, since you will want to pre-pay your loan in order to eliminate costly interest overpayments. Most lenders don’t charge a pre-payment penalty, so there is no need to go with a lender who charges this.
8. Rapid Loan Approval
Be sure and ask your lender if they utilize Rapid loan Approval Software. This computer software allows lenders to determine a borrowers credit risk instantly. Allowing for them to approve a loan within hours or even minutes. Look for a lender who utilizes this software. It will save you valuable time especially when shopping for the best interest rate.
Saving money on your home (Los Angeles Times) - Simple strategies for paying off your mortgage sooner and reducing expenses. There are dozens of ways to make your housing investment pay off faster and at a greater return. In some cases, a small extra outlay may be required, sometimes every month, but the added expense is often pocket change when compared to the available savings.
Borrowers must find the right programs for their needs and means (Inland Valley Daily Bulletin) - Loan interest rates are at historic lows, but rates and loan types are different for everybody. A good mortgage broker or bank officer will help buyers know which kind of loan is the best fit.
Reader Mailbag: Should you sell that unneeded second car? (The Christian Science Monitor) - If you're downsizing to a one-car family, does it make sense to hold onto the second car?
Are You Ready To Buy A House? (Investopedia via Yahoo! Finance) - There are a number of factors, aside from cost, that you should think about before buying a new house.
Your Source for Daily FOREX Market News and Analysis (Daily FX) - The Euro may rise against the US Dollar as leading indicators hint at the likelihood of an upside surprise in February?s German IFO business confidence survey while rising equity index futures point to well-supported risk appetite.
The PMI Group, Inc. Reports Fourth Quarter and Year End 2009 Financial Results (PR Newswire via Yahoo! Finance) - The PMI Group, Inc. today reported a loss from continuing operations for the fourth quarter of 2009 of $228.2 million, or $2.76 per basic and diluted share, compared with a loss from continuing operations of $181.0 million, or $2.22 per basic and diluted share, for the same period one year ago.
Figure your total monthly house payment (The Indianapolis Star) - The total you owe on a mortgage includes payment toward the house (principal) as well as interest (what the bank gets for providing you with the loan). You can get an idea of loan payments using a mortgage calculator found on the Web.
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