Applying for a Mortgage? Read the Fine Print!

With mortgage rates plummeting to an unbelievably low rate right now, many former renters are deciding to buy a home, and others are refinancing their original loans.  Dropping to such an impressively low rate will mean smaller monthly payments and the ability to draw some money out of the equity that many homes have accrued. The allure can be so intoxicating that many borrowers rush to sign before reading all of the nitty gritty details. And, if you remember, it wasn’t long ago that our economy nearly crumbled, so be careful of hidden traps that may ultimately cause you to lose your home.

To ensure that you’re really getting what you need out of your mortgage, it is of the utmost importance that you understand what you are signing.  Unfortunately, the only way to do that is to actually read all of the words.  Even then, some or most of the language can be extremely confusing. Many people should consider contacting an attorney or paralegal experienced in loan modifications to have a look over the documents and explain them to you, if needed.

Things you need to look for in your mortgage paperwork include:

  • Is your loan fixed (rate will remain constant for the entire duration of loan) or variable (interest rate and payments will vary and can skyrocket toward the end of the loan)?
  • Does it include mortgage insurance?  It can be extremely helpful if something happens to you and you are unable to pay, but read the details. How long will the coverage last, how much are they charging, and does it help you or the lender?
  • Are there any hidden fees?  Your attorney will know how to find the fees that are nonsense, like a ‘mortgage account fee’.
  • Are there any penalties for paying your loan off early?
  • How far are they stretching out your loan terms (if refinancing)?  While this can almost always lower your monthly payments, be sure that you are aware of the new length of your loan.
  • What fees are involved?  The loan officer who does all the work arranging your new loan has to get paid, right?  There are definitely fees written into your loan somewhere – they may be wrapped into the loan amount, which is great if you are ok with that. Just be sure that the fees are reasonable, and if you’d rather pay them up front, make sure that is something they will allow you to do.
  • Is there a balloon payment clause?  Will you have to pay a large payment at a certain point in order to pay the loan off in full?

It is definitely possible to get an honestly good deal today when it comes to new and refinanced mortgages. You just have to be knowledgeable about what to look for. Asking around among your network of professional friends is a good way to find a reputable mortgage lender, and be sure to have your loan documents reviewed by an attorney or paralegal before signing. As long as you know what you are signing up for, congratulations, homeowner!

*Photo provided by Mark Lennox

5 Responses to Applying for a Mortgage? Read the Fine Print!

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