| 1. You can negotiate a better interest rate. Although | | | | they work with and what type of relationships they |
| the general consumer knows you can often get a | | | | have. Be sure to choose a broker with multiple |
| better deal by shopping around, most people do not | | | | relationships in place so that you're assured a |
| transfer this technique to obtaining a mortgage. Keep | | | | multitude of offers from qualified lenders. |
| in mind that the interest rates quoted by lenders are | | | | 5. Your monthly payment may be higher than the |
| almost always flexible, so all you have to do is ask | | | | lender actually tells you. Keep in mind that, when |
| for a lower rate. Many times, the lender will come | | | | discussing your monthly payment, many lenders |
| back with a better offer if they're worried that you'll | | | | focus only on what amount is required to repay the |
| take your business elsewhere. | | | | mortgage loan. In reality, there are often several |
| 2. Know your credit history and credit score. Since | | | | other items that are added into that payment in |
| the largest part of the loan approval process is | | | | addition to the mortgage loan payment. For example, |
| determined by using your credit history, it is essential | | | | most monthly payments have property taxes |
| that you do not meet or speak with a lender or | | | | included in them. Others have home owner's |
| broker without first having a familiarity with such | | | | insurance included. Some payments will have various |
| information. The worse your credit history and score, | | | | other insurance and municipal fees tacked on. So |
| the worse and more expensive the final loan | | | | make sure you're fully aware of all the additional |
| payment will be. By becoming familiar with your | | | | sums that will be added to your payment. |
| report, you will not be surprised by any questions | | | | 6. Getting "pre-qualified" is actually worthless. The |
| raised by the lender/broker, plus you will have the | | | | pre-qualification is simply a lenders disclaimer that you |
| opportunity to address any negative issues on your | | | | appear to meet the criteria needed for a mortgage. |
| report. | | | | Too many lenders will send a pre-qual letter, |
| 3. APR does not mean what you think it does. The | | | | expecting the buyer to use this letter as a means of |
| concept of the APR (Annual Percentage Rate) is | | | | confidently shopping for a house. This letter is |
| designed to help the average borrower evaluate and | | | | generated entirely based on the conversation you |
| compare different mortgage loans from different | | | | have with the broker/lender, therefore no official or |
| lenders. However, since every lender calculates their | | | | formal evaluation has been conducted, and the |
| APR differently, the end result is significant confusion | | | | parameters of the final loan will most likely be |
| and an essentially worthless figure. Some lenders | | | | different. |
| include their own fees and expenses into determining | | | | 7. Buying in the winter months usually means lower |
| their APR, while others do not (hoping to illustrate a | | | | prices. If you have a choice as to when you'll begin |
| more attractive loan). Also, factors unrelated to the | | | | shopping for a home, you may want to consider |
| lender effect the APR (size of loan, type of loan, | | | | purchasing during the winter months. The summer is |
| etc.). | | | | usually considered a seller's market because buyers |
| 4. The number of lender choices you have and offers | | | | with families and small children are under time |
| you receive will be entirely dependent upon the | | | | pressure. They do not want to disrupt the school |
| number of relationships your mortgage broker has in | | | | schedule, and moving is easier in a warmer |
| place. Since more than half of all mortgages begin | | | | environment. This means less time for buyers to |
| with a broker, it is important that you get as much | | | | make decisions, shop for other homes, etc. If you |
| background information as possible on that particular | | | | can possible arrange to buy in the winter you usually |
| brokerage before committing to work with them. It's | | | | spend less money. |
| important to find out how many lending institutions | | | | |