So you’re applying for a mortgage. You’re not alone. The National Association of Realtors recently released a report showing that sales of existing homes in February saw the most growth in more than three years.
But before you do apply or go see a mortgage broker, make a little checklist of what you’ll need to have, just so there aren’t any unpleasant surprises.
Check your credit report. If you have some time before you planning looking around, do yourself a favor and see if you think you’d lend money to you, if you were a mortgage lender. You can get one free credit report a year from Equifax, Experian and TransUnion, the three credit bureaus. If there are any mistakes on the reports, especially big mistakes that might make you look like a credit risk to a mortgage lender, then you’ll want to contact them and try to get them removed.
Shop around. Don’t just go to the first lender you find. You want to comparison shop and try to get the best deal. That said, once you agree to lock in a rate, you should stop. You aren’t contractually obligated to go with the mortgage lender at that point, but generally, when a customer locks in a rate, they’re ready to buy.
Understand what type of mortgage is best for you. That is, you should know whether you want a fixed-rate mortgage, in which your monthly payment will remain the same, or an adjustable-rate mortgage, in which the monthly payment changes with market interest rates.
Ask about prepayment penalties. True, you may feel that there’s no way you’re paying off your mortgage early, but if you think there is a chance, ask if you will be penalized for doing so and see if you can get a loan that doesn’t punish you for being financially responsible.
Ask about those fees. Every mortgage comes with fees–that’s unavoidable–but some loans are a little too fee-happy. Ask your broker to explain the fees, and if they sound unreasonable or odd, ask if they can be waived or reduced. The worst they’ll say is no. And if you think the fees are too much, you can take your business elsewhere.
Careful about being too chatty. Tell the mortgage broker about your kids, your favorite TV show or discuss your job, if you want. But even if you’re tempted to friend your lender on Facebook and think he or she is really a terrific person, don’t say anything like, “Boy, thanks for all your help with this mortgage loan–I know nothing about these things.”
At least, don’t, if you plan on asking about getting prepayment penalties and application fees reduced or removed. Thank, friend and rave away after the closing.
Photo by scottchan, freedigitalphotos.net
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