We're all bombarded by countless offers for the best deal when it comes to obtaining a home loan. This one promises the lowest rate. That one touts the lowest fees. Another boasts price guarantees. Unfortunately, claims that seem too good to be true may be just that-not the whole truth. So how can you untangle fact from fiction and get key facts about loan options that may be right for you? By tuning out the bells and whistles, tuning in to important details and turning to a trusted resource, you are in a better position to uncover hidden costs and concerns long before you reach the closing table.
Protect Your Interest (Rates and All)
Buying a home may be one of the most significant purchases of your lifetime, so you want to ensure that you choose a reliable mortgage professional who will help you protect your best interest. One of the first defenses against being misled in your home loan search is to work with an experienced industry expert from a company that has a solid history and reputation. This trusted advisor should help you make informed decisions, walk you through the home loan process and offer you a variety of personalized home loan options. So, if the loan representative doesn't make you feel comfortable enough to ask questions or doesn't take time to answer the questions you do ask-move on to someone who will.
Besides helping you protect your interest, your lender also should help you protect your interest rate by explaining you options for locking it in. Make sure that the rate lock allows ample time for loan processing and get terms of the rate lock in writing. Some lenders only offer rate protection for a week or 10 days which means the rate lock could expire and leave the interest rate vulnerable to changes before the loan process is complete. Reputable lenders will frequently lock interest rates for 45 or 60 days, or longer in certain circumstances.
Heed "Good Faith"
Lenders and brokers are required by law to send out a Good Faith Estimate within three days of the loan application. This document outlines estimates of likely charges to you in the settlement and closing of your home loan. It is important that you carefully review the Good Faith Estimate and understand the various expenditures outlined. Before you make a loan decision, you can use the document to help you compare costs among lenders and brokers, verify advertising claims and identify the best overall value. Take particular notice of such items as the origination fee. Some lenders charge this fee to cover the administrative costs of processing a loan, while others will waive it for conventional loans in most states.
Get to the Bottom of It
Whether it's a flyer, letter or contract, getting all the way to the bottom of the page to read the fine print is a crucial step in making sound home loan decisions and avoiding hidden costs. Disclaimers regarding potential hidden costs such as pre-payment penalties, assumptions, negative amortization or extra points and/or fees charged to offset a low interest rate may frequently be found in the fine print.
Be sure that your mortgage professional is responsive to your requests to clarify any fine print and doesn't rush you into making a hasty decision. Costs lurking in these fine print disclosures could identify important facts about home loan options, which should help you avoid any headaches and cost-shocks down the road.
Have it All
By working with an ethical, reputable lender to help you unearth buried costs of potential home loan options, you can feel more confident that you're getting information you need to apply for a home loan that matches your needs. If you've taken the time to do a little homework and ask questions, and if your mortgage professional has taken the time to explain your options, you'll be better positioned to sidestep unwelcome surprises and may even be pleasantly surprised by how easy the process really can be.
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