Things that you should always ask when getting a mortgage

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What to consider when hiring a mortgage broker
3 years ago
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You are thinking about purchasing a new home, or refinancing your present adjustable rate mortgage into a fixed rate. You couldn?t help but hear about the mortgage mess that has affected our country lately, watched as everyone pointed fingers at the other for the problems, and you find yourself a little nervous about hiring a mortgage broker to help you obtain a loan that will fit your needs.

Your home is probably the largest investment you will make or have made in your lifetime. You certainly don?t want to take chances or risks that put you in financial disaster. It is a wise decision to educate yourself about the mortgage financing options and not blindly trust someone and later regret it.

In to protect yourself and your home, do not hire the first Mortgage Broker that approaches you through phone or written communication. Take a few days to interview several and then make your decision. Don?t allow any Mortgage Broker force you to commit to them, ignore common strong arm tactics such as ?I can guarantee this rate today only?? Avoid doing business with Mortgage Broker?s that contact you and tell you that they can guarantee a seemingly low rate, very often they turn out to be empty promises that result in a bait and switch type of scheme. This is especially true if you start to get phone calls after applying for mortgage financing, as credit bureaus and other companies have been selling what is coined ??Trigger Leads?? If after interviewing your Mortgage Broker and have developed a trust, don?t be deceived into believing an unknown source that promises??I can beat their rate??

When you considering hiring a Mortgage Broker?s approach them as a trusted professional advisor, interview them as you would a lawyer or doctor, then you can decide if you want to hire them.

In order for a Mortgage Professional to provide you with financing options that suit your budget and needs they will ask you questions to help them ascertain what type of loan you will best qualify for before suggesting a particular loan type.

Be prepared to provide the following:

- Location of property
- Approximate Market Value

If you are refinancing, the balance on your present mortgage(s) and if there is a prepayment penalty associated with them.

- The amount of your Real Estate Taxes
- The amount of your Homeowners Insurance
(A good mortgage broker will ask you if you presently have an escrow account)
- Where you are employed and for how long
- Your employers address
- Your employers phone number
- Your Gross Monthly Income (prior to taxes)
- Your present mortgage payment
- Amount of consumer credit such as credit cards, auto loans, etc..
- Be prepared to mention if you pay alimony or child support
- Be prepared to mention if you receive alimony or child support
- Any assets that you may have including but not limited, savings accounts, checking accounts, retirement funds, stocks, other real estate that you own

Be honest when asked what you believe what your credit rating is. If you have poor credit tell the mortgage broker, he may or may not be able to assist you, but at least you won?t waste your time and can find another mortgage broker that has programs for you.

After the mortgage broker has obtained this information from you, it?s time for him/her to go to work. Be leery of mortgage brokers that promise interest rates before they have time to review your application and contact lenders that he works with and find out what types of programs that you qualify for. After he gets the information, he will call you back within a day or two and inform you of several products available and should explain the advantages and disadvantages of each.

It is important for a mortgage broker to advise you that he is only giving you an estimate based on the information that you have provided. The final calculation of interest rate happens after the underwriter has obtained and reviewed supporting documents including appraisal, income verification, credit report etc??
Things that you should always ask:

- Is the interest rate you were quoted the lowest rate you qualified for or priced at par?
- Ask if the interest rate you have been quoted includes discount points
- Keeping in mind that a fixed rate mortgage is always your best bet, you may decide that an adjustable interest rate may be better suited for you. If you do opt for an adjustable rate mortgage ask these important questions:
- When will the interest rate adjust and then how often after the initial adjustment?
- What will the maximum annual adjustment be?
- What is the CAP on the interest rate? (Be advised that most are 6%) over the life of the loan.
- Ask your mortgage broker if they offer loan rate locks and if they charge a fee. It is a good idea to ask them to put the lock in writing. The devil is in the details here, asked how long the rate lock is good for and if the lock applies to all the costs.

Although most states prepayment penalties are no longer allowed, ask the mortgage broker if there is any associated with the loan and ask for specifics. It is a good practice to ask if you refinance with them at a later date if the prepayment penalty is waived.
Ask what they charge for origination- it is usually represented by percentages with 1% the average being charged.
Don?t be shy about asking the closing costs which include the following:
- Appraisal
- Credit Report
- Processing
- Title Insurance
- Escrow Fees
- Recording Fees
- Ask for a Good Faith Estimate, federal law requires that this be provided to you 3 days after application, review the one provided to you. If for any reason the terms of your loan changes (type of loan, interest rate, etc) you should receive a corrected one that shows these changes. If your mortgage broker refuses to stand behind their G.F.E., it?s a good sign that you should go elsewhere.

You should never be in a situation at closing where your interest rates, fees etc exceed what your mortgage broker has quoted you. If you are, walk away from the table, do not sign closing documents.

Review the Truth In Lending Disclosure where you will find the APR. The APR is the costs of your loan over the maximum length of the loan. If you find that the APR is identical to the interest rate you are paying higher interest rate than the market will bear
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