6. Finding The Right Loan For You
Q: How do I choose the best home loan program for me?
Your personal situation will determine the best kind of loan for you. By asking yourself a few questions, you can help narrow your search among the many options available and discover which loan suits you best.
- Do you expect your finances to change over the next few years?
- Are you planning to live in this home for a long period of time?
- Are you comfortable with the idea of a changing mortgage payment amount?
- Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement?
Your lender can help you find your answers to questions such as these to decide which loan best fits your needs.
Lender Rate Match Tip: Lender Rate Match makes it easy to search for the best home loan. Searches are free, and you can use the service as often as you like!
Q: What is the best way to compare loan terms between lenders?
The traditional advice has been to talk to three or four lenders and find out what each is offering. But that's the old way. The new way is to use the Internet to search thousands of loan programs to learn what might be available to you. Lender Rate Match is the only site that allows you to search accurately and quickly to find the best rates for your particular rate request.
To make sure your searches are as accurate as possible, we strongly recommend you first obtain your credit reports and FICO scores from the three major credit reporting agencies.
myFICO
is the only source that offers these three reports with FICO scores directly to consumers.
Q: Are there any costs or fees associated with the loan origination process?
Yes. When you turn in your home mortgage loan application, you may be required to pay a loan application fee and/or loan origination fee to cover the costs of underwriting the loan. You may also have to pay for the appraisal, a copy of your credit report, and any additional charges that may be necessary. The application fee may be non-refundable so be sure to ask.
Q: What is RESPA?
RESPA stands for the
Real Estate Settlement Procedures Act.
It requires lenders to disclose information to potential customers throughout the mortgage process. By doing so, it protects borrowers from abuses by lending institutions. RESPA mandates that lenders fully inform borrowers about all closing costs, lender servicing and escrow account practices, and business relationships between closing service providers and other parties to the transaction. For more information on RESPA call the Department of Housing and Urban Development at 1-800-569-4287 for a local counseling referral.
Q: What is a good faith estimate, and how does it help me?
It's an estimate that lists all fees paid before closing, all closing costs, and any escrow costs you will encounter when purchasing a home. The lender must supply it within three days of your application so that you can make accurate judgments when shopping for a loan.
Lender Rate Match Tip: Keep your original Good Faith Estimate and compare it to your closing statement. While certain fees may change before closing (especially prepaid taxes, interest or mortgage payoffs) watch out for any junk fees or lender fees that may be disclosed late in the process, or at closing.
Q: Besides RESPA, does the lender have any additional responsibilities?
Lenders are not allowed to discriminate in any way against potential borrowers. If you believe a lender is refusing to provide his or her services to you on the basis of race, color, nationality, religion, sex, familial status, or disability, contact HUD's Office of Fair Housing at 1-800-669-9777 (or 1-800-927-9275 for the hearing impaired).
Q: What responsibilities do I have during the lending process?
Mortgage fraud is one of the
fastest growing white collar crimes
in America. If you get involved in a loan involving fraud, the consequences could be severe. To ensure you won't fall victim to loan fraud, be sure to follow all of these steps as you apply for a loan:
- Be sure to read and understand everything before you sign.
- Refuse to sign any blank documents.
- Do not buy property for someone else.
- Do not overstate your income.
- Do not overstate how long you have been employed.
- Do not overstate your assets.
- Accurately report your debts.
- Do not change your income tax returns for any reason.
- Tell the whole truth about gifts.
- Do not list fake co-borrowers on your loan application.
- Be truthful about your credit problems, past and present.
- Be honest about your intention to occupy the house.
- Do not provide false supporting documents.
Lender Rate Match Tip: Lying on a loan application is a federal crime and not worth the risk!
Start searching and find the
lowest mortgage rate now.