Mortgage Boot Camp

Think the first online loan you come across can offer you the best rate? Think again! There are literally hundreds of programs out there, and they all favor different kinds of borrowers.

Did you know there are many things the loan officer needs to explain to you about the HUNDREDS of loan programs available to you? Did you know that a loan officer can be paid a commission based on how much you pay in fees? Many factors can make the rate you’re receiving on a mortgage more attractive than others, i.e. number of points, length of rate, graduated payments, negative amortization, etc. Be sure you know what they are before you sign the lender’s application!!!

Boot CampFirst off, your credit rating certainly has something to do with the rate you’ll receive. Do you know your credit score? To find out, let a loan officer pull your credit record. You may be thinking that you want to shop around and that lots of different pulls to your credit will lower your score, but you can rest easy. Any credit pull performed by a mortgage loan officer within 30 days of the first pull will not negatively affect your score. The credit reporting agencies understand that you would like to shop around, and you won’t be penalized under these conditions.

That said, shopping around is a step you shouldn’t skip, either. You will likely find that loan officers working for companies with access to the greatest number of lenders can give you the loan with the best rate. You may do all your business with one bank, but if you go to your bank for a mortgage, it may have access to only the few loan programs it can fund. A loan officer working for a company more dedicated to mortgages with a greater number of contacts to different lenders will have the most options available, making it more likely that he will have a program just right for you.

Once you know your credit score and have chosen where to get your mortgage, your loan officer can tell you which programs offer you the best interest rate. Either the loan officer or a financial counselor can also guide you as to how to improve your credit score if you know that it is standing between you and a better rate.

MOST importantly – Get the right kind of mortgage for your financial and personal situation and the length of time you believe you will occupy the home. For instance, if you are only going to be in a home for a year or two, DO NOT get a 30-year mortgage. The rate is higher than a 1 or 3 year variable interest rate and you do not need the security of a 30-year rate lock. Also, should you like the lower interest rates of a variable rate mortgage, make sure your personal financial situation can handle when (not if) the interest rates goes up at the end of the initial rate period.

Are you applying for a loan with 100% financing? If so, your interest rate is likely to be higher. Before you sign for a 100% financing loan, carefully consider your options. Can you settle instead for a home in a lower price range? Could a friend or family member give you the money to make a five- or ten-percent down payment? Either of these options could save you a lot of money over the term of your loan as you pay less interest. Lenders know that 100% financing is a commodity, and they will charge you a higher rate for it.

Know your credit score, shop around for the right lending institution, and select the best program for your personal financial situation. If you follow these guidelines, the lowest rate you can receive on your mortgage loan will be printed on the documents at the closing table.

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