Posted 10:56 pm Sunday, July 08, 2012
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Tips To Reduce Stress Of Finding A Home Loan
With interest rates at historic lows and home prices not yet back to pre-Recession values, many people are looking at buying their first homes, buying bigger homes or refinancing current mortgages.
According to a weekly survey of rates from Freddie Mac, the interest rate on a 30-year, fixed-rate mortgage reached a new low this week, falling to an average of 3.66 percent. The new low saves homeowners $48 a month in mortgage payments for every $100,000 borrowed, compared with what they would have paid 12 months ago, when rates averaged 4.5 percent.
The home-buying/refinancing process can be both fun and stressful. The key to making it more of the former is to engage trusted professionals to help you along the way.
With both interest rates at record lows, now is a great time to buy a house if you can afford it. While it is a buyer's market, it's important not to purchase a home just to take advantage of the interest rates. Take your time and find the perfect house and a reputable lender. This will help prevent buyer's remorse later.
Before going house hunting, figure out up front how much house you can realistically afford -- not how much a lender tells you that you can afford. Analyze your budget to find out what you are comfortable paying without feeling like you are spread too thin.
BBB provides the following advice when purchasing a new home:
Know what you can afford as a down payment. How much you initially put toward a mortgage can affect the amount of money you spend over the lifetime of a loan.
When you are ready to shop around for a mortgage, keep in mind that you are the customer and have the right to talk to multiple lenders in order to find one that best suits your needs. Be cautious of high-pressure sales tactics. Familiarize yourself with different types of lenders, such as mortgage bankers, mortgage brokers, savings & loans and credit unions.
Ask prospective lenders to explain the different types of loans available to you and carefully analyze the differences between each. Ask about the total cost of the loan including interest rates, points or other fees.
Ask for a Good Faith Estimate of all loan and settlement charges before you agree to the loan and pay any fees. Make sure to find out what fees are refundable should you decide to cancel the loan agreement.
Don't forget to figure in homeowners' insurance and property taxes, both of which are usually included in the loan amount. If you are purchasing a brand new home where taxes have not yet been assessed, they might be higher than anticipated.
Don't be afraid to ask about any charges you don't understand. Also, don't feel pressured into signing any documents until you are completely clear as to what you are signing. You are entitled to read each document before signing it, regardless of how long it takes.
For more advice on purchasing a home or finding a lender, visit www.bbb.org. To report a fraud or scam, call the BBB Hotline at 903-581-8373.
