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Educate yourself. Get several quotes. Mortgage brokers will generally offer a better deal than a bank, but it doesn’t hurt to call a bank or two for comparison as well. A good loan originator will spend as much time with you on the phone as you need. And a truly professional loan originator will ask enough questions to understand your goals. If you don’t feel good about a conversation, trust your instinct; cross them off your list and move on.

Get everything in writing

Make sure to ask for Good Faith Estimates. There can be quite a few costs associated with getting a mortgage. You want to see every one. Comparing Good Faith Estimates can be challenging because different mortgage lenders often use different terminology. Don’t let that stop you. It’s also a good idea to ask the mortgage broker if there are any additional costs that are not shown on the estimate.

Ignore the APR

APR, or Annual Percentage Rate, was originally designed to help borrowers compare mortgages. I won’t go into the mathematics involved, but in principle APR was a good idea. In practice it has turned out to be useless. Lenders do not all use the same inclusion methods in calculating APR. To add to the confusion, adjustable rate mortgage calculations are notoriously misleading. But that’s okay! APR involves two variables, note rate, and closing costs, and all you need to see is on the Good Faith Estimate.

Points versus rate

I’ve been a Florida mortgage broker since 1989. My company is also licensed in Georgia, Massachusetts, and Virginia. We talk to lots of people about home financing. It’s my experience that when people are shopping for a mortgage they often fixate on the interest rate, and overlook the points. Interest rate and points are inversely related. Unless you specify that you don’t want to pay points a lender is likely to price your loan with one or two points. This will make your rate lower, but it may not be a better deal. If the lower rate saves you fifty dollars a month on your payment but you pay an extra five thousand dollars in points, it will take you eight years to catch up with the cost of the points. Do the math.

The margin trap

Many adjustable rate mortgage programs now offer a variety of margins for you to choose from. This means that you may have an opportunity to control your future interest rate. Sooner or later all adjustable rate mortgages adjust to an interest rate that is equal to an index plus the value of your margin. You have no control over the movement of the index. But if you can get a lower margin you will have a lower rate (once your loan starts adjusting) for as long as you have your loan. Your good faith estimates should all indicate the margin for your loan. Call the individual mortgage brokers and tell them you are interested in a lower margin. Don’t be shy. It’s your money!

Pre-payment penalties; Good and bad

As a Florida mortgage broker licensed in several states I discuss financing with many people every day. Most people are averse to considering a loan with a prepayment penalty. But it is worth looking into. Adding a prepayment penalty to your loan may reduce your interest rate significantly. Prepayment penalties typically expire after three years, but recently many lenders have started offering a choice of one, two, or three year penalties. Will you still be in the home past the expiration of the prepayment penalty? If you outlast the penalty you have reduced your monthly payment for as long as you have the loan. That can add up. And it didn’t cost a penny!

Choose wisely

There are an amazing number of mortgage programs to choose from these days. You can select a fixed or an adjustable rate mortgage. Or you might choose one of many hybrid fixed period adjustable programs designed to give the comfort of a fixed for a predetermined number of years before starting to adjust. Interest only options are available now on both fixed and adjustable rate programs. When selecting your mortgage program think about yourself. Any decision only makes sense if it makes sense in the context of your life.

Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.

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If you are going to buy a home, one of the first things to do is find out what price range you can afford. Getting pre-approved for mortgage can determine the maximum home price and the loan amount you can get, based on your credit scores, income, and down payment. A mortgage pre-approval can save time and effort in your home search, and tells others that you are ready and able to buy a home.

Here’s a List of 9 Other Mortgage Tips:

1. Need flexibility on credit issues?

In addition to a low down payment, an FHA mortgage allows lower credit scores than conventional home financing. A bankruptcy only needs to be discharged for two years, and three years on a foreclosure.

2. Need payment choices for a tight budget?

Some lenders offers flexible mortgage terms with a 30 year fixed rate that gives you a payment choice each month for interest only or a fully amortized payment, which could help when money is tight.

3. Do you want an option for lower closing costs?

If you need to reduce your closing costs, you typically have the choice of decreasing the points by increasing the rate. Mortgage rates are priced to allow you to buy the interest rate up or down.

4. How long will you keep your mortgage?

If you plan to keep your mortgage for less than five years, you may be able to save money on your payments with a 5 year fixed rate plan. Also consider financing your home with zero points.

5. What debts are counted in your debt ratio?

Monthly debt payments are added to a mortgage to calculate a back-end debt ratio, including: credit card minimum payments, car loans, student loan, personal loan, alimony, child support, tax liens.

6. Are you required to have an impound account?

An impound account is money collected with the monthly loan payment to be set aside in reserve to pay property taxes and insurance. It’s usually required on mortgages with less than 20% down payment.

7. Buying a condo with an FHA mortgage?

A condominium project must be FHA approved in order to get an FHA loan. If the project is not approved, the FHA spot loan program is designed to provide financing for an individual unit.

8. What about opening new credit accounts?

Applying for a new credit card, or financing the purchase of anything, just before or during the mortgage process can drop your credit scores, and lower credit scores can cause a higher rate or worse.

9. Are you planning a job or career change?

If you plan to make a job change, especially if the change involves commission or a different line of work, wait until after your new mortgage has funded, to avoid creating a potential problem.

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Qualifying for a home mortgage loan is significantly more challenging than ever before. Subprime lenders approved too many mortgage loans to buyers financially unqualified to repay the debt. Careless lending practices led to a massive influx of foreclosures.

In order for homeowners to obtain home mortgage approval through traditional lenders today, they must possess a nearly perfect credit score, consistently pay bills on time, and have a solid record of employment. While this can be wearisome to borrowers with average or poor credit, alternative options exist for obtaining home loan approval.

One popular alternative is seller carry back mortgages. This type of financing involves the seller acting as the lender. Sellers can carry all or part of the purchase price. Buyers enter into a legal contract which outlines details of the transaction.

Seller carry back financing gives buyers time to clear negative credit marks or establish credit. Contracts generally last between two and five years. Once the contract expires, buyers obtain financing through a conventional mortgage lender.

Many property owners are entering into rent-to-own contracts. Tenants reside in the house and a portion of the rent is contributed toward the purchase price. Sellers usually require a down payment of 5- to 10-percent and apply 10- to 50-percent of the rental income toward the purchase.

Lease-to-own contracts should be drafted by a real estate attorney to ensure both parties are protected in the event of default. Contracts typically last between two and three years to help buyers establish a history of mortgage payments.

Real estate investors and investment groups provide hard money loans to borrowers unable to qualify for conventional loans. Private lender loans are not cheap. Interest rates can range between 10- and 20-percent, compared to 5.03-percent for mortgage loans obtained through lending institutions.

It is not uncommon for real estate investors to require down payments of 30- to 50-percent. Hard money home loans are not intended to last longer than three years. Borrowers should strive to refinance hard money home mortgages as quickly as possible.

Borrowers who not meet conventional home mortgage loan criteria might qualify for Federal Housing Authority (FHA) loans. FHA loan criteria include: providing proof of income, accurate property appraisal, and source of down payment (inheritance, savings, gift, etc.). FHA lending limits vary by state. In order to obtain FHA funding, borrowers must work with an approved mortgage lender.

The Department of Housing and Urban Development (HUD) provides homebuyer assistance programs. These state programs are offered to low-income buyers and individuals working in certain professions including police officers, firefighters, and teachers.

The recessed economy and housing market has opened the door to exceptional real estate deals. Now is the time to invest in real estate as long as you are financially prepared. Realize there is much more to owning a home than making mortgage payments. Take time to do the math of all costs associated with homeownership. If you are ready to take the leap, shop around for the best home mortgage deal.

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Mortgage finance has made it possible for many people to own homes and real estate. There are many options available but it is vital that you scrutinize them and come up with an arrangement that suits you. The mortgage lender is there to clarify how each option works and what would work best for you. If you want to buy a home you now have the benefit of having more to choose from, and it is easy to compare what is on offer in the market.

If you are looking for mortgage finance, you can do research online. Here, you will be able to get a list of the various lending institutions and the mortgage brokers. Mortgage brokers are popular among home buyers because they give financial advice and associate with the various lending institutions. Nowadays, even if your credit score is not good you can still access mortgage finance. However, you will be charged higher interest rates.

If your credit score is good, you  can get funding that covers a hundred percent of the buying price. If you do not have a credit score and you are buying a home for the first time, there are mortgage finance loans that are available for you. They also have the advantage of low down payments and flexible standards.

The home lending industry has also made it easier to access and approve loans. They are now using the Internet and can even approve the loans online or by computer programs. Mortgage finance has been a blessing to many people in enabling them to own homes.

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