Shopping for a Home Mortgage

Shop for a MortgageDon’t just assume you can go to your bank and they will offer you the best loan possible. 

On this page you will find links to the best websites to compare home mortgage rates. I have also anticipated some of your questions about the mortgage process and answered them in the Frequently asked Questions section and with a selection of down-loads. 

Cast a wide net

You need to go shopping for a home mortgage. I put this information together as a service to my clients and visitors. I receive no commission from referring you to these sites. I believe it is far too difficult to find the information you need during the home buying process. I do the work for you, saving you time and frustration.

Start with at least one of the comparison websites I have placed below. Here you can familiarize yourself with various lenders and deals they are offering.

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There will be a lot of fish in the Net – Compare and select the best.

[blockquote]To get a true comparison on rates, contact a mix of financial institutions on the same day. Same day comparisons remove the variations that can take place in interest rates day-to-day. Occasionally mortgage rates change dramatically even morning to evening.  You may get lucky, stay on the watch for the occasional promotion when a new loan product is launched. [/blockquote]

Get quotes from a mix of places, a direct lender, a regional bank, a credit union, your community bank, and a national bank. Also consider a mortgage broker who will access multiple source.

In down loads to the Right, I have provided you with a Comparison Chart, it will help you ask all the right questions. The other downloads are brief articles published by Freddie Mac; the major insurer of home mortgages in the United States.

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Down Loads

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Comparison Websites

I have found the following seven websites to be excellent sources to compare between different mortgage offerings.

They are in order of web traffic only, the order is not meant to be any recommendation of one over another – just click on the logo image to go the the site.

While the top three are possible the most commonly used, I appreciate the full range of features that come with HSH.com and mortagemarvel. All sites include access to excellent resources that will help you better understand the mortgage market.

Be Aware of Fees

The full cost of your mortgage until you know about all the fees charged by the bank. In my downloads I have added a handy table to compare the full cost of a mortgage between lenders. It shows you all the fees to be aware of.

What kind of fees? Most a small but some can be expensive. For example, if you are planning to lock-in an interest rate, you may face different fees for different lock-in periods – say 60-days instead of 45-days. You may also be asked to pay origination fees or “points” for lower mortgage rates.

When you enter the process of working with a lender, request for the so-called “good faith estimate” of closing costs required by the U.S. Department of Housing and Urban Development.

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Bankrate

Lendingtree Mortgage Information

HSH

mortgage News Daily

Mortgage Marvel

Mortgage - X

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Look to my FAQ below for other answers.

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What Questions do I Ask When Shopping for a Mortgage? (Click to Open)

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When shopping for a home mortgage make sure you obtain all the relevant information:

  • Research current interest rates. Check the real estate section of your local newspaper, use the Internet, or call at least six lenders for information.

  • Check the rates for 30-year, 20-year and 15-year mortgages. You may be able to save thousands of dollars in interest charges by getting the shortest-term mortgage you can afford.

  • Ask for details on the same loan amount, loan term, and type of loan from multiple lenders so that you can compare the information. Be sure to get the Annual Percentage Rate (APR), which takes into account not only the interest rate but also points, broker fees, and other credit charges expressed as a yearly rate.

  • Ask whether the rate is fixed or adjustable. The interest rate on adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month.

  • If a loan has an adjustable rate, ask when and how the rate and loan payment could change.

  • Find out how much down payment is required. Some lenders require 20% of the home’s purchase price as a down payment. But many lenders now offer loans that require less. In these cases, you may be required to purchase private mortgage insurance (PMI) to protect the lender if you fall behind on payments.

  • If PMI is required, ask what the total cost of the insurance will be. How much will the monthly mortgage payment be when the PMI premium is added and how long you will be required to carry PMI?

  • Ask if you can pay off the loan early and if there is a penalty for doing so.

SOURCE: USA.gov

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[faq_question]Do You Have Tips for Working with Lenders?[/faq_question]

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  • Get recommendations: Ask friends and family members for suggestions, especially if they’ve recently obtained a loan.

  • Check credentials: Mortgage bankers are regulated by either your state’s department of banking or division of real estate. Check with the one appropriate to your state to see if a lender is in good professional standing. Mortgage brokers may be state regulated or not. If not, check with the local chapter of the National Association of Mortgage Brokers or the Better Business Bureau to see if their record is clean.

  • Do your homework: Learn about typical mortgages and ask questions when something looks amiss; a broker may be trying to pad closing costs or other fees at your expense.

  • Take care online: There are plenty of attractive deals online, but first make sure you’re dealing with a reliable broker or lender.

If you’re working with a broker, the National Consumer Law Center recommends you demand to know how much the broker is making from the lender as well as from any fees you might be paying. It’s best to get this information upfront and in writing. Avoid a broker who is double-dipping-getting a fat premium from the lender, as well as fees from you.

The Real Estate Settlement Procedures Act (RESPA) requires lenders to give you information on all closing costs and escrow account practices. Any business relationships between the lender and closing service providers or other parties to the transaction must also be disclosed. Many of the fees are negotiable. More information is available from the Federal Trade Commission, the Federal Reserve Board, and the Department of Housing and Urban Development.

For more information on home buying and mortgages, visit Fannie Mae’s website or call 202-752-7000.

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[faq_question]What are the Types of  Mortgages?[/faq_question]

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Weigh Your Options

Fixed rate and adjustable rate mortgages are the two main types of mortgages, but there is a wide variety of other mortgage products available. Below are pros and cons of just a few of the mortgage products you may want to consider.

Type of Mortgage Pros Cons
Fixed-rate mortgage No surprises The interest rate stays the same over the entire term, usually 15, 20 or 30 years. If interest rates fall, you could be stuck paying a higher rate.
Adjustable-rate (ARM) or variable-rate mortgage Usually offers a lower initial rate of interest than fixed-rate loans. After an initial period, rates fluctuate over the life of the loan When interest rates rise, generally so do your loan payments.
FHA (Federal Housing Administration) loan Allows buyers who may not qualify for a home loan to obtain one Low down payment. The size of your loan may be limited.
VA loan Guaranteed loans for eligible veterans, active duty personnel and surviving spouses Offers competitive rates, low or no down payments. The size of your loan may be limited.
Balloon mortgage Usually a fixed rate loan with relatively low payments for a fixed period. After an initial period, the entire balance of the loan is due immediately This type of loan may be risky for some borrowers.
Interest-only Borrower pays only the interest on the loan, in monthly payments, for a fixed term. After an initial period, the balance of the loan is due. This could mean much higher payments, paying a lump sum or refinancing.
Reverse mortgage Allows seniors to convert equity in their homes to cash; you don’t have to pay back the loan and interest as long as you live in the house. Subject to aggressive lending practices and false advertising promises, particularly by lenders that prey on seniors. Check to make sure the loan is Federally insured.

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[faq_question]How Difficult is it to Obtain Financing?[/faq_question]

[faq_answer]While an overwhelming majority of buyers surveyed in the 2012 Home Buyer Survey conducted by the California Association of Realtors obtained financing for their home purchase (96 percent),the lending environment remains a challenge. On a scale of one to 10, with 10 being very difficult, buyers rated their difficulty in obtaining financing at 8.5 on average, up from 8.0 in 2011.

Loan TypesHigher downpayments are still the norm in this market, with buyers putting an average of 25 percent

down on their purchases. The average downpayment has been higher than the traditional 20 percent

since 2009.

As the market gets back to basics, we have seen fixed rate loans being obtained by 24 percent more

buyers than in 2009, when only 69 percent had a fixed rate loan and 31 percent had an adjustable rate.

Furthermore, nearly nine out of 10 buyers (87 percent) have 30-year loan terms, and only 13 percent of

buyers have terms under 30 years

2012 HOME BUYER SURVEY

California Association of REALTORS® |

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