A mortgage is essential to purchase a home, at least for the majority of people. This means the shopping not just ends with the house - the hunt extends to a home loan as well. But not many borrowers do their research before taking up a particular mortgage. In fact, as per a 2013 survey, almost 50 percent of borrowers do not do good amount of shopping. Now that it's clear you need to hunt, the question is what you should look for in a potential mortgage deal. Let's find out with these mortgage tips.
Look Beyond Interest Rates
When receiving company quotes, do not only focus on the interest rate. Also consider the fees, which includes origination fees, points, and other fees that could be charged. If there are zero fees, then it's apparent the rates are inclusive.
Talk to the Person Handling your Mortgage
Talk to the individual who would be handling your jumbo loans. That person can be a bank employee, loan officer or a mortgage broker. Find out the person's licensing credentials. Seek for references and look up online for his/her reviews, if there are any. The lending company is really not important here, because even the best companies can have bad employees.
Plan for Additional Costs
The extra costs entail title insurance, taxes for real estate transfer, and necessary escrows for homeowner insurance and property taxes. In certain states, closing agent shopping could save multiple thousands of dollars, while closing costs or escrow are the least in other states.
Seek Free Credit Report
Getting your credit report prior to start may not let you gain a commanding position and order the best terms, but you'd certainly know where you stand financially. A higher credit score doesn't necessarily make things favorable for you.
Reveal Complete Data
Let the loan officer know everything about your current financial situation when seeking quotes. Self-employed individuals, those who've had a foreclosure or people with recent career changes need a sound loan officer. When you're transparent about your finances, you're likelier to get good services.
Research Loan Types
Fixed-rate mortgages may not be correct for all home buyers. Adjustable-rate mortgages too share the same status. If you envision staying in the house with your family for almost a lifetime, longer loan periods or fixed-rate mortgages are ideal. However, if you don't plan to stay put in the house for more than a decade, an ARM or adjustable-rate mortgage would suit your goals better. ARM interest rates are static for the loan's initial several years and their starting rates are often lower compared to 30-year loan rates. Also called jumbo loans, these are loans people take for buying luxury houses.
Upfront Payment and Interest Rates
Putting down more upfront money would mean a lower interest rate, especially if you are drawing the loan for several years. However, an upfront payment doesn't make sense if you're planning refinance in some years.
Requirements for certain amount of mortgage documentation have gone up in the recent past. Therefore, know what documents you need and have them handy all the time. We have provided most of the information above, but you can get additional information here.