For most of us the most expensive thing most of us will ever pay during our lifetime will be “the mortgage”. And while we spend hours online searching for the best price on cars and for the best deal on a house-it’s pretty amazing how uninformed most buyers are about the ins-and-outs of securing a mortgage loan.
So many things are tied to your credit rating – what you pay for insurance, credit card interest rates, car loans and -mortgage loans. Lenders advertise rates and buyers assume that’s what they will pay but unless you have a “pristine” credit rating and history there is a good chance that your interest rate will be higher. Read the fine print and don’t be afraid to challenge the numbers if the bottom line doesn’t make sense.
Don’t be afraid to compare lenders. Some buyers prefer working their bank or credit union while others hunt down mortgage brokers. Loan officers employed by the bank or credit union are only authorized to use the types of loans that their employer supports. Mortgage Brokers typically represent (or have access to) multiple lenders/loans and may be a better choice for some buyers. Either way, as a buyer, you need to compare apples to apples. Make sure you understand the loan estimate, loan origination fees, APR (annual percentage rate), rate lock, closing costs and other costs (some lenders charge extra to pull your credit reports- some don’t) and then make sure the information is the same from both lenders.
Things to think about:
Buying a home is an emotional roller coaster but finding the right type loan and avoiding mortgage meltdown requires investigation and taking the time to understand the best loan type for your needs.