When finding to get a home loan you need to make sure you ask the right questions to find the mortgage that best fits your desired or situation. It is prominent to know definite aspects of the commitment you are going to get into prior to doing so., it's for this reason, that we've decided to give the four most prominent questions you must ask a bank before getting a loan:
1.Interest rate. (Amount, and is it fixed or adjustable?).
The interest rate is basically the cost of borrowing money. The interest rate is influenced by numerous factors that are connected and will be different according to the type of home loan you determine to pick. Here are the main causes complicated in determining of an loan rate:
-Economic conditions.
-Inflation expectations of consumers and businesses tend to have a major impact on the interest rate.
-The mortgage term.
-A borrower's credit.
-Borrower's debt to wage ratio.
When selecting an interest rate whether fixed or adjustable, it's prominent that you understand that fixed rates will remain the same throughout the life of the loan, while adjustable rates will go up as the life of the mortgage progresses. I would say that in most cases the rate goes up as supposed to down, so buyer beware if you know what I mean.
2.Total conclusion cost
Closing costs are fees, charges and prepaid items to process your loan or mortgage. conclusion cost occurs at the time when the covenant is executed and the title is passed to the buyer. A collection of costs that one way or an additional one influence the borrower and seller, need to be taken in to consideration. conclusion costs are paid at the end of the closure of the loan, hence the name conclusion costs. conclusion costs can contain an elective cost to reduce your interest rate which is elective on some mortgages. conclusion cost should be about 2 to 3% of the total loan amount. Whatever higher and should discard the lender and move to an additional one lending institution.
3.Ask for a Gfe (Good Faith Estimate.) Get it in writing.
Once you've completed your application for the loan, the lender is bound by federal laws to provide you with an assessment of all costs to complete or close the loan within 3 days of taking an application. This is called a Good Faith Estimate.
The document in good faith that the lender has made, must contain the assessment of all costs that the borrower must pay, as well as other fees that the lender needs to close the loan. Other estimated cost listed in the document are: the cost of asset registration, application fee, mortgage insurance and title fees, etc.
4.Prepayment Penalties (what happens if you pay your loan off early)
A prepayment penalty could be a provision in the business agreement which says that if you pay in full a loan prior to a definite set date, you must pay a fine.
The penalties are common in mortgages with adjustable interest rates, which typically have a lower rate at the beginning, but later increases.
The fines are commonly a ration of the superior primary at the time of prepayment, or a few months of interest. Whatever the situation is, you need to make sure that the loan you are applying for doesn't have a prepayment fine.
So there you have it, make sure you ask the lenders theses four questions before taking a loan with them. Theses interrogate will not only help get a good loan but also save headaches later on.
Mortgage Tips - 4 Things You Must Know Before Getting a Mortgage