People are often misled by myths that state it is difficult to get a home improvement loan. In reality, most consumers are just contacting the wrong lenders. The Internet allows people to search numerous mortgage lenders with just a few mouse clicks. Here are some quick tips to review before getting a loan:
Shop, Shop, Shop
One of the biggest mistakes that most consumers make when shopping for a loan is to only contact one lender. Consider this - would you only go to one dealership if you were buying a new car? Mortgages, like car prices, are negotiable. The best way to shop for a mortgage is to request comparable quotes from several companies.
Shop Multiple Lenders
We understand the importance of shopping around. After all, you want to make sure that you get the best rate possible on your home loan. Our programming enables you to shop multiple lenders from one web site.
Determine the total loan costs
To get the best loan, look at the annual percentage rate (APR). Many people make a mistake by thinking that the lower the interest rate the better the loan. This is not always the case. The lender usually charges an initial fee for processing your loan - this is called "points." Don't be confused by a low interest rate if the points are high. It could turn out that your total cost may be more than you anticipated.
Points - good or bad?
It really depends on if you are looking at the short term or the long term. The longer you plan to stay in your home, the more points you can afford to pay to "buy down" the interest rate. Points are deductible, and the lower interest will more than pay for the points over time.
Know the ups & downs of lock-ins.
A lock-in is a lender's written promise to hold a set rate for a specified time period until the loan is completely processed. The upside is that this locks in a lower rate when rates are changing daily. The downside is that lock-ins often cost extra and if rates go down you are locked into the higher rate.
Be comfortable with your mortgage company.
The most common mistake that people make is that they don't spend enough time choosing their mortgage company. Mortgage brokers are not all equal in expertise, experience, training & trustworthiness. When speaking with a mortgage company for the first time ask yourself the following important questions:
  • Do I feel comfortable with this person?
  • Do they take time to fully answer my questions?
  • Do they appear to know what they are doing?
  • Do they seem to want my future business?