Things To Remember When Shopping For A Loan-Part 1

The minute you decide to buy a house, a variety of emotions will flood you. You will feel excited and nervous at the same time. This chapter in your life is very monumental and you want everything to turn out exactly as you planned.
When home buying, one of the first things you need to consider is where you will be shopping for a loan. There are lists of mortgage lenders from banks, credit unions, saving associations and mortgage companies and you can find all these from your local newspaper or yellow pages or by word of mouth and when you've gathered all the data you need, you can decide where you will be applying for your loan.
Here are some of the institutions that you can borrow money from.

Government Programs

Depending on which state you are located, there are loans that you can apply for from government organizations like Federal Housing Administration (FHA) or Veterans Affairs or other loan programs being run by your local government which you may be eligible for.


Computer Loan Origination systems

Some real estate companies have this system in their offices which will assist you in determining which loan you can get from various lending companies or institutions. Using this computer generated listing can help you save time because it already has a lot of lists in its system and you don't need to jump from one building to another just to inquire about their loan programs. Just be aware that CLOs "may charge a fee" for their assistance which will either be paid by you or the lender you chose.

Mortgage Brokers

Mortgage brokers can be a confusing topic; there are businesses who will present you with a mortgage lender who will offer you a loan or they can act as your agent. There are two ways to pay mortgage brokers; one, by you as the borrower and one, by the lender or both. In case you're a little confused, inquire about the fees that the mortgage broker will be receiving.

Loan Types

There are two types of loans; these are fixed interest rate and variable interest rate loans. Fixed rate loan means that you will be paying the same amount of principal and interest rate from the start of your payment term up to the last while variable rate loan means there will be changes in the amount of payment throughout your loan term which is determined by a number of "indexes" and "margins".
If you choose variable rate loan, you will be given a booklet which is a requisite by the Truth in Lending Act to give detailed information about variable rate loan; you will also be given a disclosure. Majority of loans can be paid for 30 years or less and most of them have the same monthly payments.
There are also short term loans which has a "balloon" or a large final payment.

Interest Rate

A home mortgage loan price is comprised of the following things; interest rates, points and other fees. Point refers to the fee which is equivalent to 1% of the loan price. When the escrow is completed, points are paid to the mortgage broker, to the lender or both. It's either you will pay fewer points if the interest rate is higher or more points if the interest rate is lower. To make sure of this, always ask your mortgage broker first before you go into a deal.
The Annual Percentage Rate (APR) and additional payment details will be seen in a full document called The Truth in Lending Disclosure Statement.

Settlement Costs

There are settlement services like new surveys, mortgage insurance and/or title insurance that your broker may ask for you to pay. Additionally, appraisal and credit report may also be included. To be sure about theses settlement costs, ask your broker first before you sign to any deal.