Tips For Taking Out A Mortgage

(Taking out a home mortgage loan is something that is both an exciting and nerve-racking time in any homebuyer’s life. )

The process can be fairly overwhelming and confusing, so it is important to do your research before even beginning your first loan application.

There are many steps to taking out a mortgage, so we will start at the beginning.

A recent article from re-articles.com, “Top 7 steps to take when choosing a home loan,” discusses some important things that every potential homeowner should do when taking out a mortgage.

“Your home loan is almost as important as the home you choose. Small changes on paper - ½% here, ½% there - can mean BIG changes to your monthly payment, and thousands of dollars over the lifetime of your loan. Today, it seems as though there are thousands of mortgage brokers & lenders in every market - and there are! Unless your brother, sister, Dad, or best friend are a mortgage broker (and sometimes even when they are) your lender might not always be the most competent, or have your best interests in mind.”

The interest rate that you ultimately end up with will be a big determining factor in the size of your monthly payment. That is why you want to get the lowest rate possible for your income and credit score.

This is where shopping around will give you a big advantage because you can see what each mortgage company has to offer you in terms of the different types of mortgage products available and interest rates.

“You need to make sure that you find a mortgage broker who knows their loan programs, and can find you the best program that matches your unique financial situation. The more brokers that you talk to, the more loan programs that you will expose yourself to - and the better chance that you'll find the perfect fit, and rate.”

You should also research the different types of loans available to you and pick one that you think best fits your situation before shopping for rates, since they are constantly changing.

“Now that you know the terms you want, it's time to shop the rate. The best idea is to have one mortgage broker pull a tri-merge credit report and then ask that broker for a copy of the credit report.”

Once you have chosen a loan and filled out an application you will receive a “Good Faith Estimate” from your lender. This will tell you what your monthly payment will be as well as other important information about the loan such as closing costs. But it is important to remember that this is just an estimate and it is likely to change once your loan closes.

Many lenders also recommend locking your rate in.

“Rates DO fluctuate and are subject to change - until you lock your rate. You will typically want to lock your rate 30-45 days before closing. If you try to lock longer than that, the lender will typically penalize your rate. The bottom line is, after you've made this difficult decision, make sure that you lock in your choice!”

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