Whether you’re practicing self-defense or trying to secure a home loan as a first-time homebuyer, you need to be prepared and knowledgeable to protect yourself. Without the right information or preparation, there’s no way to tell if a home loan or a loan officer is the right fit for you.
Mortgages vary. You could call five lenders today and receive five different rates and five different monthly payments. When seeking to refinance on your home, one lender might refuse to answer any of your questions until you answer their questions while the next lender will give you a quote before even asking how much your homeowner's insurance or property taxes cost. Knowledge and preparation can overcome inconsistencies in the home loan marketplace.
As I discussed in the last post, 5 Mistakes Home Loan Borrowers Make and How to Avoid Them, focusing only on the rate is a mistake. However, the rate should be scrutinized and analyzed before you agree on the terms of your mortgage, especially as a first-time homebuyer.
The rate you receive will hardly ever be the same as what you saw being advertised, which I’ll discuss in detail in the next post. Rates change depending on the length of the loan and the type of rate (adjustable or fixed). They also depend on the quality of your credit score, the percent you’re putting down, and more.
Don’t be fooled by advertised rates. Instead, work with a caring, open, and honest loan officer that will walk you through what it takes to qualify for the advertised rate and what category you may fall in.
Did you know that you can often purchase a lower rate? It’s called a discount point, which is a percentage of the loan amount charged to you, in addition to normal closing costs in order to obtain a lower rate. Sometimes lenders might also charge origination points. Each loan type, loan term, grant, etc., in addition to the aspects mentioned above, will affect the rate or what lenders call “pricing."
Every year an average of 21 million people apply for mortgages in the US, and only around 7 million close. I'm on a mission is to change that by spreading mortgage education. Sign up for my newsletter to be a part of my Mortgage Peace Movement!