“Ask Your Mortgage Professional”                      May 2010

Top 5 Most Important Questions To Ask When Getting A Mortgage

Whether you are purchasing or refinancing, getting a mortgage is the largest financial transaction that most of us will do in our lifetime. Do you know what to ask and what to expect? Home Buyers’ success depends on you doing your homework and asking the right questions. Let’s take a look at some insight on mortgage financing, with some very important questions to ask and tips to follow when getting a mortgage.  

What Loan Programs Do They  Offer? 

This is my first question, simply because it is really the most important question.  Many lenders offer a select few options, and often give mis-information on loan programs they don’t offer.  Not all borrowers are the same, and most definitely their financial situations are all different.  Offering a wider selection of conventional as well as government loans will ensure that your financial profile will best be matched with a loan program that will fit your personal financial situation.  The current mortgage mess is a result of many borrowers getting the WRONG loan program.  Your lender should offer a minimum of FHA, USDA, VA, and Conventional financing.  If they do not offer these programs do you really know that you have the best loan strategy for your personal financial situation?   

What Do You Need To Qualify For A Loan? 

Beware of lenders that request little or no information before quoting you an interest rate.  How do they know if you really qualify for the mortgage?  Your personal information will play a MAJOR role in the interest rate and your approval for a mortgage.  With today’s minimum credit score requirements, and debt to income restrictions it is literally impossible for a lender to ACCURATELY quote an interest rate without a full application and running your credit.  A full application means, providing documentation on your income and assets.  While many lenders often advertise and quote rates with little or no information, you will not know the TRUE interest rate until you sign your loan documents.  Different Loan Programs will offer different rates based on the risk associated with that loan program.   Interest rates fluctuate on a daily basis so if you are shopping for a period of time, you may find that one lender offers a better rate today but what about tomorrow.  The best option is to work with a Mortgage Professional that knows and understands the market trends and has access to REAL-TIME market data to lock your rate with the maximum savings to you.  Remember getting the right LOAN STRATEGY is more important and can cost you less than getting the lowest interest rate advertised.   

How Much Can You “Really” Afford? vs. How Much Can The Lender Qualify You For? 

Many borrowers can qualify for much more than they may want to pay or feel comfortable paying.  When a lender qualifies you for a mortgage, they take into consideration only the debts that appear on your credit report such as, car payments, credit card payments, student loans, and any other form of debt that is reported to the credit bureaus.  Lenders however, do not count in the qualification process how much you personally pay for such items as, day care, electric, food, and other personal items.  So you need to work with a lender that will help you navigate the qualification process with your personal financial well being in mind.  Successful homeownership depends on realistic expectations on both the borrowers’ side as well as the lenders’.  Work out a fiscally responsible budget.  Work with your lender to determine the best mortgage payment options available to you and have a price range that will give you an affordable sustainable mortgage payment that will allow you to be a successful homeowner.  

Should You Escrow or Not? 

An Escrow account is set up on behalf of the borrower to deposit on a monthly basis a portion of the property taxes and insurance on your home.  This money is included in your monthly mortgage payment amount.  If you are getting more than 80 percent financing you have no option but to escrow, it is a lender requirement.  If you are financing less than 80 percent you have the option to escrow or not for property taxes and insurance.  Consider the total amount of both your property taxes and insurance.  For many this can be a pretty hefty payment for both taxes and insurance due at the end of the year.  Do you have a plan to come up with this large sum when it becomes due?  Are you able to set aside money each month?  If the lender finds that you are delinquent on your property taxes they have the right to require you to set up an escrow account at that time.  If you fail to make your insurance payments the lender can force place an insurance policy at a much higher cost than your original insurance premium. Carefully consider the escrow option at the time of your mortgage application.   

Work With The Professionals 

There are many opportunities during the purchasing and financing stages of a home purchase or refinance where you will need to enlist the help of a professional in their industry.  Be sure to seek the best in the industry and work with local companies.  Realtors offer the expertise on the housing market and will guide you through the process of purchasing the right home for the right price.  Title Agents will ensure that you are the rightful owner of the property without encumbrances to the property once you have closed on the property.  Inspectors will ensure that your property has no hidden hazards or defects that will be a surprise to you later.  Licensed Mortgage Professionals will help you obtain the right mortgage strategy and loan program for your individual financial needs.   

Purchasing or refinancing a home can lead to building personal wealth if you take the right steps to protect yourself and your investment. Make sure you work with a Mortgage Professional that will help you get the RIGHT MORTGAGE strategy to ensure your successful homeownership.  

As a Licensed Mortgage Professional I am committed to achieving affordable, responsible and sustainable homeownership to the homeowners of our community. Continued growth in our community depends on a solid foundation of homeowners that understand the responsibility of homeownership.  Call me today for more information on the RIGHT MORTGAGE strategy for your individual financial needs.  

If you have questions or comments please email them to andrew@askandrewconner.com  

Call Andrew today at 573-302-0600 

Website:  www.askandrewconner.com

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