Getting A Home Loan
Several decades ago, it would be really hard to get a mortgage for more than you can actually afford. These days, due to the competition in the lending field, more and more lenders have slackened the criteria. It would be fairly easy to qualify for a mortgage even if you have a less than ideal FICO score.
A first time home owner could bite off more than he could chew just to have the house of his dreams. This could mean too much financial pressure that would eventually lead to foreclosures or worst to a declaration of bankruptcy. A home mortgage is a major decision that would need utmost consideration. After all, if worse came to worst it is YOU… not your real estate agent, not your mortgage loan officer and not even your relatives who would suffer the consequences of a wrong decision.
To circumvent the occurrence of this disastrous event you should be extra careful in choosing a lender. Some unscrupulous lenders would offer you one sided deals that would benefit the lending firm. A reputable lender on the other hand would assess your situation, your paying capability and offer you a deal that would suit you best. Ask friends and family members for referrals or better yet search the Net for reliable lenders.
Compare features offered by several lenders. You have to avail of the best cost, fees and flexibility options. Once you have chosen your lender, it would be best to ask him a quote of the cost required in processing the loan.
Normally, a lender would provide an estimation statement 2 or 3 days after you have submitted your loan application. Most lenders would want fees for the appraisal, for the credit report and for the processing paid up front.
You have to have an option on the rate of the loan. If the lender offers you the standard variable rate, you have to look elsewhere. Basically, standard variable rate offers lower interest rates but they don’t allow additional repayments so that if you would want to have additional repayment to decrease or to shorten the term of the loan, you will not be allowed to do so. Other alternatives will enable you to save thousands by letting you switch to the basic or discount variable loans.
It is doubly important for the lender to fully explain to you the interest rates, the term of the loan and other issues relevant to the loan. This would ensure that no misunderstandings will occur later. Negotiate for lower loan fees. If you have a pretty high FICO score, you can negotiate for lower interest rates too.
For fast processing and approval of the loan, be sure to provide all the documents required. It would be more ideal if you have the down payment ready and deposited in your savings account.
Lastly, after all the documents are submitted, and before all the transactions are completed read the loan documents carefully before putting your name on the dotted line. Thoroughly read the fine print and pay particular attention on the fees and penalties. You wouldn’t want to be saddled with piling up compounded interest rates in case of repayment default.
