There was a time when
all mortgages meant comparing the fixed interest rate
mortgages of a handful of lenders. Today, however, the
search for mortgages is more detailed and perhaps just
a little too complicated to maneuver easily. Adding
to the confusion are the many, many types of loans,
loan programs of mortgage brokers, lenders, bankers,
credit unions, finance companies, among others.
Considering there’s just so much to learn, finding
the perfect mortgage that fits your needs is difficult:
no, it doesn’t start with an application, but
with a thorough knowledge of the system. True, it takes
time to understand, but isn’t it better to know
the subject before getting into it?
Being in this market will tell you that there’s
one rule that dominates in the home mortgage industry:
That you never go solely according to the mortgage interest
rate. Instead, it makes good sense to take a close look
at the jargon surrounding a mortgage program. You could
even check back with lenders or a mortgage broker or
shop on the Web for comparative rates. Ask your mortgage
lender a few key questions given here that will help
you decide the kind of loan that suits you. You can
also get information from web sites, newspapers, mortgage
books and consumer seminars.
How soon can I expect my mortgage loan application
to take?
Typically, a loan application for a home mortgage takes
about 45-60 days to come through. Of course, there have
been times when they’ve taken just 30 days too!
But really the time taken depends on how soon the lender
can get the property appraised, a credit report and
employment details and bank accounts verified.
Which documents will I have to furnish?
A certificate proving your income and assets will be
necessary to get a home mortgage loan. However, lenders
ask for different documents, so it depends on whom you
meet.
What would qualify me for a home mortgage loan?
Your lender will look at your credit history, income,
employment status, assets and debts before granting
you a home mortgage loan. If you’re a first time
home buyer, you stand a better chance of being granted
a loan.
How much would I have to pay as a minimum down
payment?
First, finalize the down payment amount on your home
mortgage loan. Based on this your lender can offer you
a range of interest rates, loan terms and perhaps even
refuse to consider private mortgage insurance. While
some loans demand a 20 percent down payment; others
are lower than that.
How much mortgage interest would I have to
pay annually?
To compare well against different lenders’ rates
on your home mortgage loan, ask them for their annual
percentage rate or APR of the mortgage interest.
How much would I have to pay by way of origination
fees on the loan?
Origination fees are usually paid as prepaid mortgage
interest on your entire home mortgage loan. Your lender
might ask you to pay this in points at closing time
just so that you get a lower interest rate on your home
mortgage loan.
Can the interest rate also be locked in?
The interest rate of your home mortgage loan is variable,
so it would be wiser for you to lock in the rates for
a specified time period rather than have a floating
rate till closing. Ask your lender for any fee for locking
in a rate and if you could lock in points.
What is meant by the “good faith estimate”
of closing costs?
Mortgages, including home mortgage loans, are accompanied
by a whole litany of fees. So, ask your lender to show
you the whole list of estimated closing costs before
you actually apply for the loan. And bear in mind that
certain fees must be paid upfront, for instance the
credit report, property appraisal and loan application
fee.
Will I also be asked to pay a prepayment penalty
on the loan?
This is a matter for mortgage home loan shoppers to
consider. You would need to know the duration of the
penalty period and how the fee will be calculated. While
some penalties stand at one percent of the loan amount,
others aren’t that simply calculated.
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