Shopping for a Loan: Seven Questions You Must AskFrancine L. Huff
Today's mortgage rates are so low that many people are rushing to refinance or look for a home to buy. Are you ready to join the gold rush to find a low-interest mortgage? Here are some important questions for mortgage lenders when shopping for the best home loan.
- What is the annual percentage rate (APR) of the mortgage loan being offered? The APR is the yearly rate that includes the interest and any points or fees you'll pay.Keep in mind that an APR for a 30 year fixed loan can only be compared with another 30 year fixed loan.
- Can you pay points to lower the mortgage rate? Ask for mortgage quotes to depict in dollars how much you will be charged in points and fees. It should be disclosed on a Good Faith Estimate GFE).
- Ask mortgage lenders to waive some fees to be competitive. If they agree to lower any fees, be sure they don't raise other costs to make up the difference.
- If you use mortgage brokers to find a loan, ask exactly how they will be paid. Usually brokers allow you to choose to pay the fees upfront, finance them into a refinance, or pay a higher rate and let the lender absorb the fees. This is shown on your closing statement or HUD-1.
- Do mortgage quotes include a fee to lock in interest rates?
- Some lenders or builders are offering special free (not cheesy insurance sales policies) incentives. For example, people who lose their jobs within two years of closing on a home may be eligible to have their payments made for a specified time. Ask about these kinds of programs.
- Get your GFE as quickly as possible to make comparing loans easier. Avoid lenders who won't provide this information.
Ask as many questions as necessary when shopping for a mortgage. Then use the mortgage application tutorial to learn more about obtaining a loan.
Francine Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
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Looking for the Best Mortgage: Shop, Compare, Negotiate
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.