It is understood that every one shopping for a mortgage wants the best rate and fee arrangements as well as lowest payments. How can you assure you get these?
Once you have decided upon the type of mortgage you want, take a few simple steps to help you with this. The type of mortgage will normally be a decision between fixed and adjustable.
As the names infer, fixed rate home loans have interest rates that do not change. The rates on an adjustable rate mortgages change over the period of the loan, one, three or five years, typically.
Many people would prefer an adjustable rate mortgage because the rate is typically lower. Today, the typical homeowner changes residences frequently, so there is not a great advantage to locking in a fixed rate for a long time when a lower rate is available for a shorter period.
However, a fixed term, typically thirty year, home loan would probably pay off if you expected to be in the same home for an goodly length of time.
After the decision regarding the type of loan you want, you need to do a rate comparison, either by phone or online. It is imperative that you note fees as well as rates when you are doing this comparison. A rate that is lower may be counterbalanced by charges that are higher. Make a list of the lending institutions with the best rates and lowest fees.
For best results, you should have at least three banks for comparison. It is worth the effort to put the time into getting as much information as you can. A home loan is a major commitment, and you want to have the best deal.
Contact each of these banks and learn if you qualify for a mortgage with them and if they are able to give you a commitment for a loan. It is important to supply the most current and accurate information to potential lending institutions. Any information you supply will be verified before a mortgage is granted, so fudging is just wasting both your and their time.
Just because they advertise mortgages doesn’t mean your application will be approved. Lenders often have other issues to address. Lenders have portfolios made up of different types of loans, and yours may not fit the mix that they currently have to have.
If you have a choice between banks, ask family and friends about their experience with them.
Finally, you have to make sure you are happy with the services provided; if you are not receiving good customer service, you do not have to work with that particular institution.
OK, now you have narrowed down to one lender; the next thing to do is get a pre approval letter. This will permit you to start looking for your house while they process your application. As your application is processed, you will be required to give verification of much of the information on the application.
One of the things you may consider at this time is whether or not you want to fix your loan rate. You usually wouldn’t be able to do this until an offer is made and the bank realizes that it will not be long until the closing. Don’t forget that the opposite may occur; you may lock into a rate and then rates move down. You can cancel the application, but you will incur charges if you do.
Taking these steps will help assure that you get the most advantageous rates, terms, fees and service on a mortgage that you may be living with for years to come.
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