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Finding the best mortgage

September 16, 2007

When looking for the best mortgage, according to the Federal Trade Commission:

· Get information from several types of lenders, including thrift institutions, commercial banks, mortgage companies and credit unions.

· Ask if a broker is involved. A broker usually is paid a separate fee for services.

· Figure out what you can afford and what all of the costs and fees are, not just the monthly payment and the interest rate.

· Find out the current mortgage rates and if they're the lowest rates of the day or the week.

· Ask if the rate is fixed or adjustable and how the loan payments might change over time.

· Points are paid to a lender or broker for the loan and often are linked to the interest rate. A lower rate usually means more points. Ask for points to be quoted as a dollar amount.

· Ask about the requirements for a down payment. Sometimes, 20 percent of the purchase price is required. It could be as little as 5 percent on a conventional loan, but you might need private mortgage insurance.

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· Shop for the best deal.

· Check the accuracy of your credit report before you apply for a loan. The three major reporting companies - Equifax, TransUnion and Experian - are required to provide a copy once a year if it's requested. Call 1-877-322-8228 or go to www.annualcreditreport.com.

Additional advice

· For a Federal Housing Administration mortgage, the total monthly payment must be less than 29 percent of a purchaser's monthly income, according to the Web site FHAResearchCenter.com. Mortgage costs plus long-term debt cannot exceed 41 percent of income.

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