MORTGAGE INFO

How to Select A Mortgage Company

The complex aspect in purchasing a new home is the arrangement of financing unless you have the assistance of a reliable mortgage company to process the loan smoothly.

First, decide the type of loan best suits your needs: Fixed Rate Mortgages (FRM) have equal payments with a set interest rate over the entire term of the loan. Adjustable Rate Mortgages (ARM) have interest rates that change based on a predetermined market index and generally have a cap ceiling rate. Graduated Payment Mortgages (GPM) have payments gradually increasing by a certain percentage over the first several years and then fix for the remaining term. Growing Equity Mortgages are loans in which the monthly payments increase significantly each year according to a set schedule or pre-selected index. A Balloon Mortgage has a series of monthly Payments with the remaining balance due in lump sum at the end of the contract. Some allow for refinancing at the end of the balloon period.

Second, cooperate with your lender by providing all the documents required as quickly as possible, even if they seem irrelevant to you. The lender is coordinating other parties like surveyors, appraisers, title companies, inspectors and credit reporting agencies. In addition, your credit and references are being evaluated by several levels of underwriting. If one step falls behind schedule the loan approval process can be delayed. Your patience and understanding is important, especially when additional information and/or documentation is required. The lender is working for you, not against you and only receives its fee when the mortgage is closed.

Third, be familiar with terms. Application Fee is collected up-front and will be credited upon closing. It is needed to pay the appraiser who is an independent contractor providing a service regardless of the outcome of the closing. Lock-In is the period of time a specific interest rate and discount point are available. Closing Costs can vary but the mortgage company is required by law to give you, at application, a Good Faith Estimate of what is due at the time of closing. The title company coordinates the figures but can not submit a final figure to the borrower until all parties submit their cost info. Origination Fee is the mortgage company’s fee for preparing and servicing the mortgage application but Discount Points are a percentage of the loan amount paid upfront to obtain a lower interest rate. Standard Documents such as Deed of Trust Notes and Note Addendum can not be changed or altered by law.

Fourth, Ask friends and associates for loan company referrals and then compare the companies with more questions! How long has the company been in business? How much experience does the loan officer have? Does the lender explain the process thoroughly? Is the loan officer knowledgeable and attentive? What’s the appearance of the local office? (Remember, internet loans take away the personal face-to-face contact with a loan officer.) Compare apples to apples when comparing interest rates and loan types. Realize advertised rates in the newspaper are subject to hourly change so they are only a guideline, not a basis for choosing a mortgage company.

Fifth, when considering Refinancing and Equity Loans have a qualified professional evaluate all the variables and your goals. Consider the number of years you will remain in the residence; the amount of time it takes to recoup the closing cost of the loan; the term length of the loan; selecting an adjustable or fixed interest rate; and your future employment possibilities.

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