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Most people incorrectly use the word “mortgage” in reference to a home loan. A mortgage is actually the document the buyer gives to the lender, which protects the lender’s interest in your property. With this mortgage document, the lender holds a lien on your home until you have paid off your debt. Rest assured that as the titleholder, you––not the lender––own the home and no one can sell your home without your permission. If you are unable to pay your home loan, however, the lender has the right to sell your property to recover its money.
It is never too early to begin educating yourself about mortgage loans. There are numerous resources for loan information; books, lenders, bankers, real estate agents, and the Internet are only the beginning. Take the time to research lenders and loan varieties to help you understand your needs and your options.
It may go without saying, but while you want to get the most house for your money, you do not want to buy more home than you can afford. Defaulting on your home loan can not only cause you to loose your house, it will destroy your credit and make it more difficult to for you to purchase another home.
Lenders often will qualify you for as much money as they want to lend you. It is your responsibility to decide how much you can afford. Remember that your monthly home expenses will include the interest and principal plus addition costs such as insurance, taxes, and homeowners association fees. Home repairs and maintenance are also your responsibility, so you many wish to set aside money each month for these inevitable expenses.
Many borrows make the expensive mistake of choosing the first lender they talk to. All lenders and all mortgages are not made the same. The loan’s interest rate is the simplest factor to compare, but take the time to dig deeper. It will save you money! Compare all fees associated with each loan and negotiate as necessary.
Interest rate
Broker fee
Prepayment penalty
Loan term
Yield spread premiums |
Rate lock fees
Points
Appraisal cost
Credit report fee |
Comparison shop for all costs, rather than choosing the lowest interest rate. Pay special attention to prepayment penalties. The loan terms may require you to pay penalties for selling or refinancing your home. Also, remember that the loan officer’s job is to make money for the lender. Don’t be afraid to negotiate. The lender should be willing to explain all fees to your satisfaction and to take time to discuss the loan contract thoroughly.
It is a good idea to ask the lender to provide a written list of all costs on the day before signing. Check this written statement with the fees you initially discussed. With so many lending options available today, you have many, many choices. Take your time, and find the lender who can offer the best loan for your situation.
What is an Interest Only Mortgage?
How to Figure Mortgage Interest
How Reverse Mortgages Work
Facts About Adjustable Mortgages
Mortgage vs. Deed of Trust
Information on Predatory Lending
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Cell: (704) 577-5726
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