Choosing the type and terms of your mortgage loan is an important financial decision.
- Understand the loan types and terms.
- Know your situation.
- Ask the right questions to the right people.
Choosing the type and terms of your mortgage loan is an important financial decision.
If you want to effectively compare what different lenders have to offer, asking the question “What is your rate?” isn’t going to work. There is no simple answer to that question, because it depends on a host of factors, including; how long the rate is guaranteed (the rate-lock); if there is a prepayment penalty on the loan; what your property is worth (loan-to-value); what your credit score is; whether you will qualify based on your reported income and assets.
To shop for a mortgage and compare lenders you have to ask the right question, which would sound something like this: “What rate can I lock in today for thirty days on a cash-out refinance for a $500,000, 30-year fixed rate mortgage, with no points and no prepayment penalty; my property will appraise for at least $800,000, I want to state my income and my assets, and my middle credit score is 742; I want to know all the lender and broker fees; and, of course, I want the quote in writing.”
This may sound like a lot, and if it does, we’re here to help—just contact us and we can walk you through any step in the process. Once you are ready to pop the question, knowing whom to call is as important as knowing what to say. When you ask the right question to the right people, the rate and terms you are quoted will be clear, accurate, and comparable. The three sections that follow will provide you with guidelines for quickly gathering the information you need to ask the right questions, and for finding the right people to talk to.
Choosing the type and terms of your mortgage loan is an important financial decision. Although you may already know that you want a 30-year fixed, or an Option ARM, review Which is the best loan for me? to help make sure all of the terms of the loan—prepayment penalty, interest only, points, etc.—are the right ones for you. It is also a good idea to talk to an experienced mortgage broker or lending officer to explore the ramifications of your available choices.
You must make sure that you understand your particular situation from the lender’s point of view. You need to know your credit score, and how a lender will view both your income and your assets. What does a lender need to qualify me and provide an accurate quote? tells you what information you need to provide and how to get it.
When you want to compare mortgage offers, start by talking with a mortgage broker and a direct lender with whom you have worked before, or who has come recommended. How do I find a good lender? will provide you with some guidelines for deciding whom to call. Make sure that all of your communication about rate and fees, and the rate lock, is confirmed in an e-mail.
