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10 Questions To Ask Your Mortgage Rep or Banke
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 loans 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 dont 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 whats available to you. And as always its always no cost, no obligation.
Get out there....
Invest in your future.
Regards
Garret
Home Loans -- Federal Regulators Warn Lenders to Be More Careful
Federal banking regulators have recently expressed some concern over the housing market as home prices in the United States have risen to record levels. While homes are more unaffordable than ever for many people, the lending market remains strong, mostly because of the introduction of new, ever-more-flexible types of loans. While these newer loan types, such as the interest-only loan, make buying a home easier for some borrowers, they also propose a greater risk to the lender.
The lending market has been quite aggressive during the last five years, as investors and homebuyers have purchased real estate in record numbers. Buyers who are skittish about investing in stocks have put their money into real estate instead, and prices have climbed to record levels. Lenders have been all too happy to accommodate the long line of customers in their offices with an ever-increasing array of products. With hundreds of loan types available, nearly everyone can qualify for some type of mortgage today. The problem, as regulators point out, is that some of the more popular types of loans are inherently risky. Two such examples are the interest-only loan, and home equity loans that exceed 100% of a home?s value.
The problem with such loans is that they are both issued under the assumption that home prices will continue to rise. Prices may continue to rise, but if they don?t or worse, if they fall, lenders could find themselves in the ugly position of holding liens on property that is worth considerably less than the amount of the loan. As of yet, there?s no sign of a crash in real estate prices, but foreclosures are up in both Texas and Florida, and this could be an indictor of more difficult times ahead for the lending industry. The banking regulators didn?t issue any orders regarding how high-risk loans should be handled, but they did caution lenders to check the credit scores of borrowers carefully and to eschew or cut back on so-called ?no-doc? loans, which do not require full documentation of a borrowers assets or income.
This should be of relatively little concern for the average borrower, who would probably think that such guidelines represent ordinary common sense. Unfortunately, common sense sometimes gets ignored during boom times in business, only to be remembered when buyers start to default on their loans. By that time, it?s too late to do anything, and the stockholders are left with the debt.
Gearing Up for Bad Credit Mortgages
Mortgage would have never happened, had mortgages been a no profit venture for the mortgagees or the mortgage providers. The lender receives much more than he had actually lent. And you feared that you would not qualify for the mortgages having a bad credit history. Mortgagees somehow find ways to match borrowers with the offers available with them in order to have your business.
Bad credit mortgages are mortgages offered to people whose credit history has been adversely tainted. Sub-prime lenders make a special provision for people with an adverse credit history. But, it is crucial to escape lenders who pose as sub-prime lenders, but are actually overcharging them. There is a misconception in the minds of people that having a bad credit lessens their chances of getting a mortgage. In fact they take the offer as if it is the best that they can get.
We cannot expect the mortgage providers to not differentiate between those with a good credit history and those who have not. This however does not mean that the borrower must accept all terms on the mortgage without questioning their validity. There are many mortgage providers in the UK and the case will match some or other lender if a proper and exhaustive search is made. There are a few tips which could be used to reduce the intensity of the differentiation.
The trust having been botched because of the bad credit can be restored somewhat by advancing a certain percentage of the mortgage amount as a deposit. The lender is more concerned about the security of the amount lent when he decides to not offer mortgages to people with a poor credit history. With the borrower offering a part of the mortgage, the lender can be assured that the borrower will not default.
A mortgage protection will also go a long way in instilling faith in the lenders. However these will involve an extra payment from the borrower. This often deters the borrowers from taking mortgage protection. The borrower already burdened with the monthly repayments to the mortgage feels mortgage protection as a nuisance. However, one must take mortgage protection as a bitter pill which will be helpful in crisis situations like death, illnesses, and unemployment. Lenders get the impression that the borrower is more concerned about the repayment of the mortgage.
The decision to advance mortgages is made after viewing the credit report. The credit report is prepared by the credit reference agencies. Many a times there are discrepancies in the credit report. It is necessary to apply for a correction in the credit report as many lenders may disqualify at the very sight of a bad credit. It is also necessary to get the credit report from all the credit reference agencies as there might be differences between them.
Before planning to not pay the next installment on the bad credit mortgage, the borrowers must keep this in mind. There is not always a second chance available. While lenders had faith on you in offering mortgages this time, they would not have it the next time. So, it is better to be regular in making payments to the mortgages. This will also help in an improvement in the credit history.
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