Research your lender and any disputes with organizations like BBB and/or the Department of Real Estate
Compare rates. Lenders will often lower their rates and/or fees in order to beat out competition.
Do not let multiple lenders pull your credit. If you want to shop around and feel compelled to give your credit report, get a copy of the first report and forward it on to other lenders. This will help avoid point loss on your credit score.
Thoroughly review all loan documents prior to signing. Pay especially close attention to the Note, Deed and any riders to the Note and Deed. Make sure any Prepayment Riders or Adjustable Rate Riders are accurate. Also pay attention to the Hud and make sure fees are disclosed as discussed prior to signing.
A prepayment penalty is a monetary amount charged if you pay off your mortgage prior to the fulfillment of the prepay term. Prepays are usually 1 year, 3 year or 5 year.
A soft prepay allows you to pay off a current loan if you sell the property without penalty. If you refinance, you must pay the prepayment penalty.
A hard prepay applies in all circumstances if you pay off the loan before the prepayment term expires.
You can occasionally get a prepayment penalty waived if you go through the same lender. Check with your mortgage consultant before entering into a prepayment arrangement so you know your future possibilities.
If you have any intention of selling or refinancing, analyze the probability before entering into a prepayment agreement. Penalties are expensive and typically equate to 6 months interest.
You should not have a prepay if your credit is good and your loan to value ratio is 80% or below. Prepays are usually only offered on high loan to value products, ficos under 620 and/or specialty products such as payoptions or hard money loans. If a lender is giving you a prepay and you think you might sell or refinance the property within the prepay term, make sure you review the cost benefits and research other lending options.
If you are in an adjustable rate mortgage, do not allow your lender to make your prepayment penalty longer than your fixed rate term. For example, it is wise to not take a 2 year adjustable rate mortgage loan with a 3 year prepayment penalty. You will be in a position to accept the likely higher payments or pay 6 months interest to get out of the situation.
Interest only loans allow you to simply pay the interest on your loan balance rather than principal and interest.
Interest only loans tend to have significantly lower payments allowing many borrowers to afford properties they typically wouldn’t be able to purchase.
As a consumer, be careful when you take an interest only loan with a high loan to value ratio. If your property value drops but you are not paying down principal, you could wind up in a bind in the future.
Important Elements To Finding A Loan