Below we have listed some tips and things to remember when shopping for a mortgage. Please call us at 800-871-2636 with any questions.
- Advertised mortgage rates generally include points
You know those mortgage rates you see on TV, hear about on the radio, and view online. Well, most of the time they require you to pay mortgage points. So if your loan amount is $150,000 and the rate is 4.0% with 1 point, you have to pay $1.500 to get that rate. And there may also be additional lender fees on top of that. Many lenders use this tactic to get their phone to ring, just to inform you later your closing costs will be thousands higher. Don’t fall in the trap.
- The lowest interest rate is not necessarily the best.
Most shoppers are probably looking for the lowest interest rate, but at what cost? As noted above, the lowest rate may have steep fees and/or require discount points, which will push the APR higher and make the effective rate less desirable. Many first time buyers have limited funds to begin with and can’t pay for discount points, etc. Be sure you know exactly what is being charged for the rate provided to accurately determine if it’s a good deal.
- Compare different mortgage programs.
Low interest rates are NOT everything, each loan program may have different variables that can make one a better choice. Example – Let’s say John is looking to get a new mortgage, he is trying to decide between the USDA and FHA loan. John ends up choosing the FHA loan because the interest rate .25% lower and he thinks it’s a better deal. What John later discovers is the FHA loan monthly mortgage insurance costs (MI) is nearly 3 times higher when compared to the USDA loan. So even with a slightly lower interest rate, the FHA mortgage costs much more each month. Financially speaking, the USDA mortgage would have been a much better choice for John.
- Pay attention to your credit
Clean up any little credit hiccups before starting the mortgage approval process. Understand that shopping around may require multiple credit inquires, which is ok if done within 30 days. Try not to apply for any other types of loans before or while shopping for a mortgage. The last thing you want is for a senseless credit card application to ruin your chances of mortgage approval. Remember, the interest rate you receive is tied to your credit score. Higher credit score means less risk for lenders, which in turn mean lower interest rate for you.
- Deal with a local mortgage company
Purchasing a home in Florida? Deal with a Florida lender. There are many reasons for this, mainly your local loan officer will have a better working knowledge of the area. In addition, closing costs and government fees will vary from state to state – your local lender will understand this. If you are considering a specialty mortgage, like a USDA loan, be sure your lender has experience with the program. As the loan officer if they have closed any USDA loans? don’t be afraid to ask questions.
- Take your time
Purchasing a home, especially for first time buyers, is a very big deal. Don’t feel pressure from realtors or anyone to make any sudden decisions. Slow down, do your homework and consult with family, friends, and other people you trust. Don’t ever feel obligated to work with someone, especially if they’re pushy.
Questions? We are ready to help 7 days a week. For fast service please submit the “Request Contact” form at the top right side of your screen. Mobile users can find the short Request Contact Form here. Be sure to also visit www.FiveStarsMortgage.com for the latest mortgage info.
Florida Mortgage Shopping Tips 2014 – 2015