Get a More Favorable Mortgage

By Sandy Flores

Special to Excelsior

Although property prices rise and fall, usually the value of the home increases over time. This means that if you decide to buy a property, the chances of obtaining a significant gain return on investment. Just as important as choosing your property, so is choosing a suitable mortgage loan, depending on your financial situation.

 It is elementary that you compare the prices of mortgages for buying a home and determine which mortgage is offering more favorable financing terms. Different types of financial institutions that provide mortgage loans may quote different prices for the services and products they offer.

Know how much you can pay as down payment and find out all the costs of the loan. It is not enough to be aware of the monthly payment or the interest rate only. Ask about the same loan amount, its maturity and the type of debt, so you can compare the figures.

Request a list of current interest rates of the financial institution and ask if those rates that have quoted are the lowest of the week or day.

Ask if the interest rate they are offering is a fixed interest rate or adjustable. Keep in mind that when interest rates on credit are adjustable, they could also increase the monthly rise.

If you’re quoted a rate of credit with variable interest, will ask how to vary both the interest rate and the monthly payments.

If you are interested in a variable rate loan, or known as “ARM” (adjustable), it is important to have the following information:

The specific dates on which the loan is adjusted.

The “index”, for example, Treasury securities one year or the prime rate.

The “margin” or the amount added to the index when adjusted.

If the mortgage has a “cap” limiting the adjustment sharp increases.

Ask about the annual interest rate (APR, for its acronym in English), which includes not only the interest rate but also includes points, broker costs and certain additional compulsory credit charges expressed as an annual rate .

A mortgage containing different charges, such as charges for initiating and / or verify credit, broker fees, operational costs and settlement fees and closing. Every lender must give you an estimate of these charges, what is commonly known as “Good Faith Estimate”.

Many of these fees are negotiable and some are paid when submitting the credit application (as in the case of application fees and valuation) and other to close the deal. Sometimes you can find loans “without charge”, but usually they have higher interest rates.

Ask what is included in each post, as one could be included several concepts. Ask for an explanation of any fee you do not understand.

Keep in mind that depending on credit institutions, some of these require a down payment of 20 percent of the purchase price of the home. However, other institutions also offer mortgage loans that require less than 20 percent – sometimes as little as 5 percent on conventional loans. When a down payment of 20 percent is not made, lenders usually require the buyer to purchase private mortgage insurance to protect the lender in case the buyer fails to pay. There are also government assistance programs available such as the FHA (Federal Housing Administration), where the minimum down payment is only 3.5 percent.

1. Ask about the requirements of the lending institution for a down payment, including what you have to do to verify that funds for your down payment are available.

Two. Ask if the financial institution provides special assistance programs.

Three. If your loan requires Private Mortgage Insurance:

April. Ask what the total cost of the insurance.

May. Ask how much will the monthly premium including Private Mortgage Insurance (PMI, for its acronym in English).

When you have this information and analyze what each lender offers you negotiate the most favorable deal for you. Agents and financial institutions may offer different prices for the same loan terms to different consumers in one day, even if they have the same credit ratings. The probable reason for this difference in price is that loan officers and brokers Credit is often allowed to retain part or all of this difference as extra compensation.

The difference between the lowest available price for a loan product and the highest price that the borrower is willing to pay, is generally known as excess. When too much is produced, it is incorporated at the price quoted to consumers. It can occur in both variables and fixed loans in the form of points, fees, or the interest rate.

When you are satisfied with the terms you have negotiated, ask the lender or broker a written undertaking unchangeable interest rate including the agreed rate, the duration of the commitment and the number of points to be paid. If you charge a fee to secure the loan interest rate, it can be repaid at closing.

The Law on Equal Credit prohibits lenders from discriminating against an applicant in any aspect of a credit transaction, whether by reason of race, color, religion, national origin, sex, marital status, age, if all or part of the applicant’s income comes from a public assistance program, or if the applicant has exercised any right of good faith protected by the Law of Consumer Credit Protection.

The Fair Housing Act prohibits discrimination in residential real estate transactions based on race, color, religion, sex, handicap, familial status or national origin.

Under these laws, you can not deny a loan to a consumer based on these characteristics nor You may be charged more for a loan or offered less favorable terms.

Performing the research necessary and pay attention to the smallest details and considerations will allow you to take the most convenient and profitable for you, otherwise it could become a very large, or even worse, a nightmare problem decision.

Feel free to ask questions about the details of the loan when you talk to the lender, the realtor, the sellers or your attorney, and keep asking until you receive clear and complete answers.

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