Before starting a serious look for a new home, take the time to meet with a mortgage broker and get yourself pre-qualified. That way, when you make contact with the real estate agent you wish to work with, you already know what price range you are shopping in. With all the wonderful homes available in the Tri-Cities real estate market, this will save you precious time and effort.
Your broker may be expecting a commission from the lender, so do some research, seek advice and don’t let yourself be rushed into signing anything. Think you’re getting a good deal from your mortgage broker? Try looking at the fine print. Your mortgage broker could be getting paid by a lender to sell you a loan. The practice is perfectly legal. It’s also controversial. Critics complain that brokers looking for a fat check from a lender can lead consumers into unnecessarily pricey loans. Borrowers don’t need to despair, though. Experts say there are ways to make sure you’re getting a good deal from your mortgage broker.
1. Do your homework: Some fees and rates are negotiable — so don’t say yes to the first deal you hear. “My first advice would be to shop around. Check with a variety of lenders”, says L Jean Noonan former associate director for credit practices in the Federal Trade Commission’s Bureau of Consumer Protection. Also, consumers should be wary if their broker is offering a nontraditional mortgage that doesn’t require full documentation of income and assets. “Those mortgages almost always carry a high interest rate, and the consumer should be very sure that that’s the right mortgage for them, says Noonan. It’s important to understand all of the fees, as well as the interest rate associated with the loan.
2. Bring a buddy: If you’re no real estate expert, get help from someone you trust – other than the broker. “It’s fine to bring someone with you who can help stand up for you if you’re feeling pressured,” said Noonan. The key is to ask for help from someone who isn’t getting paid. You can turn to a homeownership counselor, or friends and family with professional expertise or at least experience in real estate.
3. Don’t be shy: It’s important to ask questions, experts agree. You want to look for the loans that best meet your needs and budget,” said Carole Reynolds, a senior attorney with the Federal Trade Commission’s Division of Financial Practices. You need to know whether the loan has a fixed or adjustable interest rate, whether it includes a balloon payment and how soon you could face an interest-rate adjustment. And, perhaps most important: Be wary of terms such as “no cost” and “no fees”.
4. Don’t sign under pressure: Take a deep breath, and remember that you are in charge of choosing the best mortgage for yourself. “When brokers use high-pressure tactics, if a broker presses them to sign a contract, that should be a telltale sign that this broker is someone they should be wary of”, said Reynolds. Don’t sign a contract you don’t understand just to get the process over with. It’s easy to be intimidated at a closing. After all, there are many pages of loan documents to review, and some the language is cryptic or in small type.
5. Know the score: Before you enter negotiations, look at your credit score. That way you can research loans ahead of time and find out what sort of rates you qualify for. You can get free credit reports from AnnualCreditReports.com.
By Ruth Mantell, MarketWatch