How To Choose The Best Fixed-Rate Mortgage

We have already spoken about what factors to consider when deciding between a fixed rate mortgage and an adjustable rate mortgage. If you are still stuck with this decision, you should read that section again.

As mentioned before if you want peace and security of mind, you would probably be better off with a fixed-rate mortgage because it is completely predictable in terms of the amount you have to pay in the future. However, an adjustable-rate mortgage can help you save money in the long run if you’re ready to gamble a bit on market trends.

A fixed rate mortgage is usually easy to find than an adjustable-rate mortgage. However, this does not mean that you should pay any less attention to the various features concerning a fixed-rate mortgage. In this section we will discuss a few of these.

 

Contact information.

You should always have the phone number that you can call in case there are any questions or problems in the future. This number should not be just a call center number for a large institution. It should be the number of the person you ultimately interview for a direct phone number, fax number and e-mail address.

Details of the person you deal with

But in most cases you’ll be dealing with a loan officer from the lending institution. This is the person that you should be able to call and check up with regarding the progress of your loan of to complain if the process is moving as expected.

Loan processor

A loan processor is the person who handles all the paperwork concerned with the loan from the time that you submit your application to the time the loan is closed. Loan processor’s jobs includes everything from conducting credit investigation to preparing loan documents that you will sign. If possible get the loan processor’s direct phone number, fax number and e-mail address.

Dates

If any problem arises in the future dates could prove important.

Loan program name

If the mortgage lender has a particular name for the mortgage they are qualifying you for, you should have that name. It makes for easier reference.

Interest rate

What is the interest rate that the lender is quoting along with the annual percentage rate?

Points

As we have discussed earlier what is the number of points that are being charged for a particular interest rate. A quote of an interest rate without a quote of points is quite meaningless.

Fees

Ask the lender to identify and itemize all lists of fees and charges that are applicable to your loan application such as processing fee, credit report, appraisal fee and others.

Required down payment

You should ask the mortgage about down payment requirement. In most cases you’ll be required to make at least 20% to avoid taking the private mortgage insurance. However, if you’re agreeable to taking private mortgage insurance you can have a downpayment as less as 5 to 10%. However, this is rare with regular mortgage lenders. To find lower down payments limits, one can usually do better with an FHA mortgage. If you cannot make 20% down payment and don’t want to take the private mortgage insurance and you can utilize the 80-10-10 financing technique that we have discussed earlier.

Loan amount allowed

Posted on case and does have different slabs of terms and conditions that apply to different levels of borrowing. Getting a certain interest rate and terms and conditions that you like is no good if you are not being lent to amount your need. Ask the lender how much amount he is willing to give.

Term

What is the term of the mortgage that you are qualifying for? Or the terms and the interest rate valid for the 30th or 15 year mortgage. The interest rate on a mortgage to different towns also tends to defer.

Prepayment Penalties

We strongly urge you to avoid a prepayment penalty clause in your contract. Ask a mortgage lender if there is any prepayment penalty clause in your home loan-counseling out. The lender is bound to get this in the truth in lending disclosure form that is handed over to the borrower.

Is the loan Assumable?

Finding an assumable home loan is quite difficult in today’s date. All VA loans are assumable. With an assumable loan, the borrower can pass off the mortgage to the person when he sells his house. The mortgage continues on the same terms that were applicable for the first home owner.

Estimated monthly payment

How much are you going to pay each month for a mortgage?

Tags: