Lending Tips to get you the best Loan

Looking for the best payment and the lowest fees? You’re asking to be scammed!

Anytime a consumer puts price above their short and long term financial goals, they get what they deserve. A short sighted adviser that tells these consumers what they want to hear regardless of the back end cost.

Terms for mortgages are no exception to the rule, “Pay now or pay later.” To avoid being sorry the morning after signing your mortgage you must consider your past, present and your future.

Look Into Your Past: Taking a look at your credit report for free is the first step in assessing what kind of credit risk you will be for your potential lender. Annualcreditreport.com will reveal what each credit bureau is showing as your payment history plus any collections, liens, judgments or bankruptcies. If you want to pay for a credit score, you can, but realize the banks will have to pull their own report and credit score to qualify you. Knowing your own credit issues will help your lender “pre-qualify” you for programs before pulling a credit report.

Look Into Your Present: There are three parts to the Good Faith Estimate of Costs which is a standardized itemization of fees to execute any mortgage loan.

1) The flat, third party fees to execute the loan. This includes your bank and broker fees, appraisal, and government recording fees. Your origination or any discount point to “buy down” your interest rate will be included here and this is where you can negotiate.

2) Title and Escrow fees. These fees are standard to each company and are not negotiable through your loan officer. Typically the real estate agents involved in your purchase transaction choose these providers. Your bargaining power here rests with an upfront discussion with the Realtors involved.

3) Prepaids and Escrows. These costs are specific to the property you choose as they relate to the taxes you will owe and the insurance coverage you obtain on the property. For purchases, you will need to pay for one year of hazard insurance up front and typically pay into an escrow account that will pay your taxes and insurance through your mortgage. Also included will be the daily interest due on your mortgage through the end of the month. Your close date (how many days left in the month) will obviously determine how large that number is.

Look Into Your Future: Know your financial horizon on this home. Are you staying for just a few years or is this your last home purchase? Is building equity very important to you or moderately important? Will your income be increasing or decreasing over the next 5, 10, 20 years? How much cash will you need from this home when you buy your next? Answering all these questions before you talk to a lender will help that lender design loan options that are relevant to your situation.

Lastly, communicate all that you know about your past present and future to any loan officer you are working with. Ask for three loan options to consider. Ask for the upside and downside of all mortgage terms. Adjustable rates, prepayment penalties and payment options are not always bad if you know why you are using them.

All loans pretty much cost the same, whether it is through interest rates, points or fees. You just need to decide which balance is best for you in the “pay now or pay later” rule of life.