Applying for a loan can seem like a daunting task. Use these tips as a starting point and make it easier to understand what you’re getting yourself into.
- You should ask your lending institution for a list of its current mortgage rates. Also ask the lender whether or not you’re being quoted the lowest rate for day or week.
- If the rate you’re quoted on a loan in an adjustable-rate, ask how and when your loan payment will vary.
- Ask what the loan’s Annual Percentage Rate (APR) is. The APR will show as a yearly rate of all the fees associated with the loan including the broker fees, points, interest rate and other credit charges you will be required to pay.
- Ask your broker or lender to quote you a dollar amount rather than just a number on any points you’re being charged on the loan.
- If you’re satisfied with a proposed interest rate, you can ask your lender to lock in the quoted rate. There may be a fee charged to lock in the rate and the agreement will only last about 60 to 90 days.
- Most loans have additional fees. In some instances, money can be borrowed to cover the fees, but that will increase the overall amount of debt you acquire. Some fees are paid up front, while others aren’t paid until closing.
- The institution that actually lends you the money will usually charge a Loan Origination Fee for processing the loan, often expressed as a percentage of the amount of the loan.
- Certain lenders will also charge a fee to check into your credit worthiness and determine if you are likely to repay your loan. These are called Underwriting Fees.
- Broker Fees are typically paid at closing. A mortgage broker may charge you an additional fee, not just the origination fee. Be sure to check with them as to what the fee is if you’re working with a broker.
- Transaction/Settlement/Closing Costs usually lump together several charges. They may include title examination, application fees, title insurance, abstract of title, deed preparing fees, property survey fees, other mortgage fees and settlement documents, recording fees, attorney fees, credit report and appraisal fees. The Real Estate Settlement Procedures Act requires that a lending institution provide the borrower with a good faith estimate of the closing costs at the time of application. The estimate should list the expect cost as a range or an exact amount if applicable.
- Always ask questions if you don’t understand something. Your lender should give you an in depth explanation and make sure you know what you’re paying for.
- Certain fees like the Brokers Fee or the amount of points assessed on a loan are negotiable. It doesn’t hurt to ask if they can give you a better deal.
Contact the Restivo Team for help on purchasing a home in South Florida or for any questions on getting a loan. We are here to help answer your questions.
