Be
Careful When Comparing Mortgage Rates
10 Things You Probably
Didn’t Think of
By Sandra Wellman
Most
people know it’s important to compare mortgage rates before they
purchase or refinance a home. Some may even know to compare fees,
points and other costs associated with purchasing or refinancing
their home, but there are some things they don’t think about or
just don’t know. Here they are:
·
You
may not be able to get or even want the advertised rate. The
surprisingly low rate may be for a 2-week lock in period. Unless
the lender can guarantee you will close escrow in 2 weeks, you
need to find out what rate you can get for a 30-45 day interest
rate lock, or whatever you feel comfortable with.
·
You
should try to avoid having your credit run until you’ve decided
between 2-3 lenders. You can request a pre-approval from 3-4
mortgage companies, some of whom will get rates quotes from many
lenders and give you the best 4, giving you a total of 10-12
quotes. Note that these are only estimates if they haven’t run
your credit. Be sure to read the terms for the pre-approval
estimate.
·
Ask
the lender if they will provide your credit score when they do run
your credit. You should have an idea of what it is, but it’s
nice to know what the recent score is as this will affect the
interest rate you get.
·
Beware
of the “no cost” loan. It will probably have fees included in
the loan, possibly increasing the interest rate and simply not cost you any
out of pocket costs. Even paying a ¼ of a percent higher is not
worth it to save a few hundred dollars or even a thousand. If you
don’t have the money, try to get it somehow if you can.
·
Ask
for all the fees you will have to pay before having lenders run
your credit. Some may not want to give it to you. The good/honest
ones with nothing to hide will, at least as much as they can
before running your credit. Some fees may depend on your credit
score.
·
Be
sure you can prepay the loan or have a bi-monthly plan set up if
you want to without additional charges.
·
Find
out how often they re-calculate the outstanding mortgage interest.
You want them to do it daily or at least monthly, but definitely
not yearly. What if you want a bi-monthly mortgage later on or you
get a large bonus and want to apply a little to the mortgage; if
they don’t re-calculate often, you’ll pay the interest on the
old balance and not the new one. This can add up if it’s for a
whole year.
·
When
shopping online, be sure you are on a secure page when sending
your social security number over the Internet. You should see a
small yellow lock in the lower left corner of your browser window
and an “s” next to the “http” in the URL area of the
browser window.
·
When
shopping online find out if they process everything online and
send you an email or if they have to call you with the quote. Try
to get the former. You don’t really want a bunch of people
calling you to try to talk you into a loan. You do want the option
to call them and ask them questions without having to wait.
·
Sometimes
you can get a small percentage point off if you have your mortgage
automatically deducted from your checking account. This is a good
thing, just beware who you are dealing with and what you are
signing, read the fine print.
Buying
or refinancing your home is important and will affect your life
for a long time, so don’t take it lightly, be careful and be
prepared, you’ll be glad you did.
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