During our slow economy, homeowners have been able to reap many good benefits
. Banks are offering deals on refinancing and new mortgages as they compete for your business. Choosing the wrong offer for a particular loan need could destroy your money situation, but a good proposal could save you thousands of dollars.
It is highly important to research and learn the basics of different mortgage options before deciding which loan is right for you.
Everyone you talk with is obsessed with interest rates. When shopping around one must also take into consideration the term length, amortization schedule, lender fees and closing costs. Lenders are required to provide you with a Good Faith Estimate after you have received an application, but it is wise to request this document prior to completing any paperwork. Closing costs can quickly eat away at the savings you receive from refinancing. Be sure to calculate the fees and determine if it is worth the transfer. Compute your break-even point to determine how long you will have to stay in your home before seeing any kind of savings.
It is highly recommended that you lock in an interest rate. Many fees will change while a loan is being processed and higher costs may be attached when the final paperwork is complete. Instruct the lender to put the agreed upon interest in writing, confirming it when all is done. Banks are not required to do this unless requested. Adjustable rate mortgages are not ideal for most borrowers unless they intend to sell the property within one year. Monthly payments will raise and lower depending upon the interest rate. Several individuals have found themselves in foreclosure status due to extremely high payments.
Individuals become comfortable with one bank and tend to seek them out for all financial needs. Shop around for the best rates and bring a Good Faith Estimate back to your current institution to see if they will match or beat it. A loan is a huge purchase and one should not have to settle for a higher rate. Even if you received prior loans from your bank, there is still a requalification process. Predatory lending is still a common practice within the market. Despite laws to protect borrowers, many will continue to be overcharged. Many people will continue to be overcharged on interest rates and lender fees. Banks are revenue making businesses and will persist on getting the most out of every consumer.