The commotion of house hunting is finally over. You found just the right house here in Elkhart County, Indiana and your offer has been accepted. It was a great buy. Now, just one more hurdle --getting a loan--and you're home free.
Often buyers are so eager to get this "final detail" behind them, they rush through this portion of the transaction and end up with less-than-ideal terms. Borrowers, however, have something lenders want--their business. This positions them to negotiate the best possible price (cost of loan), terms and service.
Let's look at price, or the cost of the loan. The first thing to do is find out what the current rates are-information readily available in your newspaper or from your sales professional. When comparing rates, figure the annual percentage rate (APR), which includes interest, extra fees and costs amortized over the life of the loan. Also determine the number of points, if any, tha the lender will charge to make the loan. (A point is equal to 1 percent of the loan amount). I have two very good lenders, but of course, you are free to use whomever you choose. Rick White of Synergy Mortgage or Shayne Sherman of Indigo Financial Group.
Next, consider what loan options the lender offers. There are six or seven basic types of loans, which vary in their duration. Check how rates are calculated (fixed versus variable) and whether charges are fully amortized over the life of the loan or whether you'll have to pay points up front and/or balloon payments at the end.
Is there a prepayment penalty clause? Which terms are best for you depends on such factors as what changes you expect in your income, how long you plan to own the home, and what you predict will happen in loan rates in the years ahead. For example, if you only plan to reside in the home for a year or two, starting with a lower Adjusted Rate Mortgage (ARM) might be the best choice. If you have no plans to move and feel that inflation will rise rapidly, a fixed rate would obviously be better.
Finally, and perhaps most importantly, consider speed and service. Buyers shouldn't have to wait days for approval and weeks for closing just because the lender is slow. Your sales professional should be able to recommend several lenders with whom he or she has had positive dealings. And don't forget family and friends-they can be a great source of recommendations (as well as horror stories?).
Remember, qualified buyers are great prospects for lenders-sogive your business to the lender who demonstrates he not only wants it, he deserves it.
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