So you looked for months and months and one day you discovered your dream home. Next step, how do I pay for this wonderful home?
Before trotting over to the local bank or mortgage company, there could be some things you need to know. There are some things mortgage companies won’t tell you. Knowing them will make help you avoid potential pitfalls that could delay or prevent you securing the loan necessary to secure you dream home.
1. You’re not dealing with an independent mortgage broker. Usually, you run to a mortgage broker when you want to obtain a loan for a home. That’s fine, as it means you don’t have to sweat even the small stuff. However, what you don’t know is that the mortgage company is actually paying these brokers for referrals. Thus, you are not sure if the product offered to you is something that you need or an expensive one that allows both the mortgage companies and these brokers to earn more money.
2. You’re not getting the lowest possible interest rate. You really can’t expect lending companies to offer you the possible lowest rate in the market, can you? After all, how can they earn money out of every transaction? Expect the interest rate to be slightly higher, perhaps 1 or 2 percent than the actual percentage. Now, it’s up to you to decide if the extra charges are something you are willing to accept or not.
3. You are obtaining the right loan. Surely, you’ll meet loan companies telling you that you deserve something better. Thus, they end up offering you a package that is expensive. You may hardly notice it, though, since it’s something that is still within your budget.
4. You will be paying a lot more in your foreclosures. A lot of home owners believe that the costs will end at the back mortgage payments, but they are wrong. There are still a lot of costs to think about including attorney’s fess and commissions of the sheriff. These payments, which can go as high as $8,000, need to be paid before you can get a new mortgage again.
5. There’s no such thing as pre-qualification. Or we can say this as your prequalified status doesn’t have any bearing at all to your qualification. You may have an excellent credit score, a faithful payee, and working class; but unless the information in your loan application have been verified and confirmed, what you say or write will mean nothing to the mortgage company.
6. You can cancel your mortgage insurance. Mortgage insurance doesn’t come cheap, but your mortgage lender will tell you that you need it since you can hardly make the 20 percent down payment. You can only cancel it once you do. The Homeowners Protection Act, however, will tell you that once your home’s equity reaches 22 percent, the insurance should be cancelled automatically—but home owners will always have a choice to do it even before it goes to that percentage.
7. They can’t help you if you can’t help yourself. They may promise the moon and the stars, but in reality, these companies will not be able toprovide you of the help that you need if you don’t give them sufficient and accurate information. And with so many applications to worry about, spending more time on yours is definitely not their cup of tea.
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