Are you ready to start the adventure of taking a mortgage? In the interest of saving you some frustration, here’s a few things that might come your way in the near future.
1. Don’t believe the ads
Ok, so you knew that already. Everyone should know that, but still some people make the same mistakes over and over again. You see this great ad for an ARM that leads with great interest rates, much better than the fixed rates you were comparing to. You’ve done everything right, but you didn’t realize that rate won’t last long, it will go up, and the money you ‘saved’ will become a grain of sand in the lifespan of your mortgage.
2. Private loans are not a bad idea
If you are a person your family and friends can trust, and you happen to know that one of them is looking to invest his money somewhere – you might not need to borrow the entire sum of the mortgage from financial institutions. The private loan, which can also come from the seller himself or a noninstitutional private lender, should be able to give you better terms – lower interest, less paperwork and bureaucracy, no loan fees and things just tend to be more flexible. Make sure you don’t become the black sheep of the family: cause no problems and prove to the lender that it was the good deal you promised.
So you applied for a deal with your broker. You’re thrilled to get this up and running. But wait, there’s some more work to be done. The lender needs to make sure the asset is worth what you are asking for. You will also pay a fee for that, usually $500 or more. You’ll probably be OK if the appraisal comes in at or above the amount you’re asking for, but if it comes below the asking price, you’ll need to justify it to your broker.
4. You agreed on a deal with your broker, now ask for an interest rate lock
Most deals are good for 1-2 months and secure you just in case the rate goes up. That’s preventing the broker from asking you to pay the higher amount, or even recalculating it if you qualify for taking a mortgage loan. You might be able to get a longer rate lock, but you are likely to pay your broker for that in one form or another.