A mortgage may be the most important commitment somebody can make in 2019. In fact, statistically, a mortgage lasts longer than most marriages and thus should be understood before being accepted. This article will inform you of the crucial information that people need to know about mortgage loans.
Ask Your Realtor for More Than One Recommendation
Understanding the mortgage process is key. Why? Because finding the best loan will save you loads of money. Some loan officers are great at selling, others aren’t. According to Mortgage CRM bntouch, by shopping around you usually shave anywhere from .25% -.5% off your interest rate. Getting more than one recommendation for a loan officer will give you the opportunity to explore and decide which lender you’ll be dealing with for the next 30 years.
It’s Safe to Shop Around
If you’re anything like most people, then you might be worried about getting your credit score checked multiple times in a short time span. In normal situations, this is perfectly understandable. However, when it comes to mortgages, from the first time you get your credit checked, you’re given a 5-day window to have it pulled by other mortgage institutions.
Take advantage of this time window to get honest quotes from each of the banks you’re looking to work with. It’s well worth the time you invest.
APM Matters More than Interest Rates
A large number of people don’t know the difference between the Annual Percentage Rate (APR) and the interest rate. And the difference is more important than you think. Did you know banks can lower their interest rates and still make all the money back by charging you closing costs? Because of this, the interest rate (by itself) is an inaccurate way to gauge your mortgage cost. Instead, look at the APR.
The APR takes into account all the fees that you’ll be paying on top of the interest rate and thus provides a more accurate picture. When shopping, compare APRs, not interest rates.
Research Local and National Real Estate Markets
Being “underwater” on a mortgage means that your debt is more than the home’s value. Imagine buying something for $300,000 when it’s only worth $250,000. Unfortunately, going “underwater” is all too common for people who don’t take the time to do the proper research.
Start by researching economic forecasts for the national economy, Fannie Mae, for Freddie Mac, and real estate predictions to get a rough idea of what’s going on. Take it a step further and see what the Federal Reserve is up to. Don’t go it alone though. Take advantage of the greatest tool in your arsenal—your Realtor. He works for you so make the most of his expertise.
Once you’re armed with solid analysis, you will be much better prepared to make the best possible decision for your financial future.
Now that you understand what you need to know about mortgage loans, getting one won’t seem like such a daunting task. After all, it’s a very important decision. Research, take your time, and understand what you’re signing up for. It’s just that important.