Finding the right mortgage or home equity loan is not as simple as it sounds. It is a task that should not be taken lightly. In this installment on home loans and mortgages we will take a look into considerations homeowners need to make before, during and after the process.
Never base your mortgage options solely on the interest rate. You will end up incredibly disappointed if this is the sole determination for your mortgage. The entire process of obtaining a mortgage needs to be based on establishing a relationship in which you enter into an honest agreement that benefits both parties while navigating throughout the transaction.
A mortgage is one of several financial communications that should not be made solely through online transactions. Getting a mortgage is nothing like buying a new rug or planter; there are too many variables that arise throughout the process that can’t be effectively addressed online. This is not to say that mortgage seekers should exclude the internet in their search to find the best rate, calculate your potential loan and get other helpful information. It is not a wise option to work with an internet-only based mortgage specialist.
It is best to avoid interest only loans unless you are planning on moving shortly or that the home loan is a short term bridge loan or construction loan. When you take out an interest only loan you essentially never build any equity in your home. You are only paying interest without building ownership in your home.
Fees in home loans are normal. Just how much you can expect to pay will be dependent upon the loan option and the company which you get your mortgage through. Some fees in home loans are unavoidable while some are unnecessary and junk. Before agreeing on a mortgage and the fees that you will pay get a good faith statement that shows all of the fees associated with it.
Here are some fees to ask about:
Application Fee: The amount it will cost to process your mortgage application.
Points: The fees that are paid directly to a lender at the closing in exchange for a lower interest rate. One point basically equates to $1,000 for every $100,000.
Credit Evaluation: This is a fee that is paid to determine the borrower’s ability and willingness to pay.
Loan Processing: The loan processing fee is charged to cover the costs of processing the application including credit checks, property appraisals and admin expenses.
Appraisal Fee: This is the cost for a professional to come in and estimate the value of the home.
Title Search: The cost of a title search is typically between $75 to $100 dollars. The title search company will research the history of a title on the home.
Title Insurance: There are two forms of title insurance: lender's title insurance policies and owner's title insurance policies. This protects both you and the lender.
Documentation Fees: This is a fee for processing documentation for the mortgage.
Underwriting Fees: This is a series of loan fees, most often wrapped together including origination fees, appraisal fees, credit report fees and such.
Escrow Fees: Lenders require the borrower to include taxes and insurance premiums within their mortgage payments. These fees are placed in escrow, which is basically a holding account, until the payments are due. The fees are then paid out by the lender to the appropriate parties.
Look deeper into "junk fees" that some lenders will try to sneak in including: amortization schedule fee, trustee fee, financing statement fees, appraisal review fees and such.
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.
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