Sunday, October 4, 2009

What To Ask Your Mortgage Company

Ask your colorado reverse mortgage professional these points to be sure you choose the program that will best exceed your family

What is the mortgage rate?

This is the most obvious question about colorado va loan. The note rate is used to calculate your monthly payment payment, and it will determine how much you’ll pay over the life of the loan. However, you will need to understand more than simply the quoted rate. A good benchmark for comparing offers is their annual percentage rate. This figure combines the interest costs and other fees charged by a lender over the life of the payment.

Will the mortgage rate change over the life of the loan?

In the case of a fixed actual rate payment, the actual rate will remain the same for the entire term of the loan. Adjustable interest rate mortgages, however, have interest rates that change periodically. If you’re considering an adjustable rate mortgage, make sure you understand what the adjustment is – that is, how often the rate will change (usually annually). Also, ask what the margin will be as that will determine your payment, and find out what caps will protect you from large payment increases. You should request a chart showing the past performance of the index the payment is based on as well.

Will I be charged points?

A lender may offer to lower your payment if you pay discount points up front. One point is equal to one percent of the principal – two points on a $150,000 mortgage, for example, equals $3,000, and may lower your rate by 0.5 percent. banks may also charge origination points, which are administrative fees and do not affect the interest rate.

What are the closing costs and other fee?

Ask each servicer for a Good Faith Estimate (GFE) of the closing costs. (Lenders are required by law to provide a GFE within three days of your application). Take the time to go through each estimate carefully to be sure you understand what each item means. This is important when comparing offer as servicers sometimes use different terminology for the same item.

Will you lock-in the interest rate?

A lender may allow you to lock-in the interest rate and points quoted in your offer for a specific period of time, often 30 days. This will protect you if rate go up during the time it takes to process your application. As what date the lock-in becomes effective and whether there is an additional expense involved – and get the agreement in writing.

How will my down payment affect the cost of the loan?

Some bank require only a very small down payments of 3.5 or 5 percent, and some even offer zero-down-payment loans. But these carry significant expense to offset their inherent risk. Typically, if your down payment is less than 20 percent, the lender will require you to pay for private mortgage insurance (PMI). On the other hand, you may be able to reduce the cost of your payment, or at least improve the terms, by making a large down payment.

What documentation do you require?

financial institutions will ask you to provide a bundle of personal information, such as social security number and an appraisal of your home. Ask for a checklist so your application is not delayed by missing paperwork.