How to Find the Best Mortgage

Once you've got your credit up to par it is time to find the best mortgage. There are many variables that can affect your loan and how much money you give away to creditors. This important information can save you thousands.

To ensure that you are getting the best rate possible it is important that you call around to different lenders. You can also contact a mortgage broker who arranges transactions for you rather than directly lending you money. A broker will contact many different lenders on your behalf but, they are not required to find you the best deal unless they are contracted to act as your agent. So, you will not only need to shop and compare lenders, you will also need to shop brokers.

It can be unclear whether you are working with a lender or a broker, so you may need to ask. You do need to find out if a broker is involved because they are paid a fee for their brokerage services. They can be paid either at closing, added into your interest, or both. So, it is important for you to ask. You will need to negotiate with lenders and brokers.

When shopping for a mortgage it is important to compare apples to apples. Be sure to shop based on the same loan amount, loan term, and type of loan. Then, you will be able to compare rates. Ask for the current lowest rates for your credit score. Be sure to ask if these rates are for a fixed rate or adjustable rate mortgage (ARM). Remember, with an ARM once interest rates go up so will your monthly payment. I've seen client's monthly payments increase by as much as $1,000 so be cautious if looking into ARMs. If you do consider an ARM be sure to ask if your payments will go down if the rates go down.

You will also need to ask about the loans annual percentage rate (APR). The APR considers the interest rate, points, broker fees, and other charges that may be applied as an annual percentage rate. Be sure to check to see what fees may be applied.

Also, look into the points applied to your loan. These are fees paid to the lender or broker sometimes linked to the rate. Often, the more points you pay the lower your rate. If your lender is talking to you in terms of points ask for the dollar amount.

You will encounter many fees when getting a new mortgage. The fees can include: Loan origination fees, Underwriting fees, Broker fees, Transaction fees, Settlement fees, and Closing Costs.

You should be able to get a good estimate of these fees before hand to compare and can be negotiable. Some are paid at closing and others can be rolled into the loan. But, this will increase the amount of your loan and your monthly payment.

The traditional loan requires that you have 20% for a down payment; but there are many loans out there that do not require this. If you do not put 20% down you may be required to purchase private mortgage insurance to protect the lender in case you are unable to pay the loan. Be sure to ask your lender for down payment requirements or if they have any special offers you might qualify for. If you are required to get PMI ask what the total cost will be, how long you will need to have it, and what the monthly cost will be.

The difference between the lowest possible price for a loan and the amount a client agrees to pay is called an overage. This can come in the form of points, fees, or interest rate. Loan officers and brokers are often allowed to keep a portion of this amount. Ask your lender or broker to write down all the costs included with the loan and ask them to waive or reduce some of the fees. But be careful! Sometimes they will try to reduce one fee and raise another. Be sure this does not happen to you.

If you are able to find terms that you are happy with ask the lender to lock-in the rate with a written contract. This should include the rate, the period the lock-in lasts, and any points or fees to be paid. It may take a month to close on a home so this lock-in will protect you from losing the rate if rates increase. If rates fall you may be able to re-negotiate down to a lower price.

To begin comparing prices you may want to start by looking online or in your local paper. If they do not list the fees, ask. When shopping many different lenders do not let them all pull your credit. Many inquiries on your credit can hurt your score. The first lender should be able to give you your credit score and you can use this information to shop around. It is a great idea to check your credit before applying. You don't want any surprises on your credit when you go to apply.

Also be sure not to apply for new credit while looking for a mortgage or waiting for your loan to close. I once had a client approved for a mortgage and who went out and financed thousands of dollars of new furniture. When the lender pulled their credit one last time at closing their score had dropped drastically and were unable to get the loan. They also had no place to put their new furniture. Be sure to ask your agent before you move any money around or apply for new credit.

Buying a new home is very exciting. But, be sure to do all your homework. Shop and compare every aspect of your loan, but be sure to keep your credit protected throughout the process.

http://www.robertscreditgroup.com Roberts Credit Group is the nation's leading credit repair company. They specialize not only in removing negative items, but also the very important aspect of teaching clients how to obtain new credit and budgeting to prevent future credit mistakes.

Roberts Credit Group is owned by Jeremy and Natalie Roberts. They are dedicated to spreading the word about the effects of credit on every day life and how Americans can use their credit to save money and enrich their life.