Remember you would not buy the first house that was offered
to you, so why go with the only mortgage that is offered to
you. Ask for more than one good faith quotes. See what
options different lenders will give you. Be sure to ask the
lender to not pull your credit report, but to give you a
good faith quote based on the paper credit report you will
have brought to him.
Understand what your credit report says. And don't order
your credit report online. Most people order their credit
report on the internet, sometimes they even get their free
report. What they don't realize is that by doing this, they
worsen their credit history because when your credit score
is pulled more than once, your score will lower. And it
will be pulled more than once if you pull it and then the
mortgage company pulls it again. Instead what you should do
is order your credit report through the credit bureaus by
calling their 1-800 numbers. Be careful, because they will
try to tell you to obtain in on the internet, be patient,
stay on the line and ask for a written copy. This copy will
be your true credit report. This is what will actually be
pulled up by the mortgage company.
Consider using a mortgage broker. Sure you will have to pay
an additional fee, but in many instances that fee will be
worth it when you get the right type of mortgage loan. A
mortgage broker will help find you several loan options to
choose from. You can then choose the option that best suits
your needs.
When you go to a mortgage broker or a bank make sure that
the bank or mortgage broker does not sell you a higher
interest rate than what you qualify for. Many banks will
pay a broker to sell his customer a higher mortgage rate.
This is called Yied Spread Premium or YSP. So if you
qualify for a 6% interest loan but your broker or bank is
selling you a loan with an interest rat of 6.5% then the
bank is making more money. Look for a line on your
documents one that's says YSP. If it is positive that means
that you are not getting the lowest interest rate you
qualify for.
How do You Avoid This?
Be upfront with your broker or banker, and negotiate. If
you negotiated the price of your home, you can definitely
negotiate your mortgage. Every fee on the mortgage is
negotiable. The only thing you cannot negotiate on are the
taxes, the filing and the insurance fees. Before deciding,
get a copy of your good faith estimate, take it home and
start investigating all the fees the bank or broker is
trying to collect. Explain to him, what you have found out.
You will soon learn that he changes things pretty fast.
When you use a broker tell him that you are willing to pay
up to a half point in origination fees, but that you don't
expect to pay an back end fees. He will understand what you
are talking about.
Finally read your closing documents very carefully. In fact
you should ask an attorney to be present. It is always
better to be safer than sorry later. It is better to spend
a few hundred dollars to consult an attorney now, and not
find out later that you are spending thousands of dollars
paying what you should not have to. Many brokers and banks
feel somewhat uncomfortable and too time consuming.
Generally speaking and in most cases the attorney does not
find anything wrong with the closing arrangements. But you
know the principles of Murphy's law. Something may go wrong
if you don't do things the right way.
In this type of arrangement it is not wise to penny pinch.
In fact be sure to always have a home inspection done. If
you don't do things you will regret it. It is always best
to have spent a few hundred dollars up front. But what you
want to avoid is having something BIG go wrong halfway down
the loan.
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Jim Donaldson is a writer for the mortgage information site
http://www.mortagesave.com where there is more information
to be found on mortgages. please visit
http://www.mortagesave.com for more information.
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