1. When checking interest rates, always ask for the total closing costs associated with the interest rate. Some lenders may quote a lower rate but have higher costs, which means you effectively bought down the rate.
2. Because interest rates can change daily (sometimes throughout the day), compare rates with legitimate lenders on the same day.
3. Beware of the “low baller” whose interest rate and closing costs are substantially different than other lenders on the same day. Some loan officers who are either inexperienced or illegitimate will quote you terms on a mortgage that they cannot deliver. If one quote seems unusually lower than the others – be cautious! [All lenders get their funding from the same sources. It’s the lenders individual overhead costs that cause some rates to be higher than others.]
4. Do not give your social security number to anyone until you have decided which lender you feel comfortable working with. Some loan officers may order your credit report without your knowledge to see if you are credit worthy. Each time someone orders your credit report your credit score may drop which can affect the interest rate you qualify for.
5. There are several factors that go into determining what interest rate and closing costs you qualify for such as credit score, loan-to-value and purpose of the loan. This makes shopping for a loan over the telephone risky. Once you find a comfort level with a lender, be sure to get a Good Faith Estimate. This legally required document should detail your closing costs, interest rate and loan structure. Nobody wants to be surprised at the closing table.
REMEMBER: Financing a home will be the largest single transaction in your life. Take the time to educate yourself on the financing process so that you don’t make a costly mistake. |