5 Secrets Home Mortgage Lenders Won’t Tell You
1. You Can Negotiate – One of the biggest secrets that home mortgage lenders will not divulge is that it is possible to negotiate certain aspects of a mortgage loan. Obviously if you have very poor credit your ability to negotiate will be zero or close to it, and you may be lucky to qualify for any loan at all. If your credit is good and you receive several offers you can negotiate to get better terms on the loan. Some lenders may offer lower rates and more favorable terms, and you can use this fact to open negotiations with the lender that you prefer to do business with.
2. All APRs Are Not The Same – Home mortgage lenders talk about the APR offered, but they do not disclose that this percentage rate can be reached in different ways and does not really mean much. Some lenders will have an APR that includes the application fees while others do not add these fees into the APR formula. Comparing the APR offered by each lender is almost pointless, and there are other methods that can help you determine the best lender instead of APR comparison. This rate can also vary on other factors as well, such as the loan size, title insurance requirements, mortgage insurance requirements, and even whether the interest rate is fixed or variable.
3. It Is Easier To Avoid Mortgage Insurance Than To Cancel This Coverage – Mortgage insurance is a typical requirement for any borrower who puts a down payment of less than 20% on a home. If you do not provide a down payment of at least this percentage then almost every lender will insist on a mortgage insurance policy for the lender’s financial protection. It is usually better to wait until you have the 20% to put down on a home then to buy now with the plan being to cancel the mortgage insurance once your equity reaches this amount. If your mortgage starts out requiring this insurance it may be difficult or even impossible to cancel it in the future as long as there is a substantial mortgage balance remaining.
4. Clearly Mark Any Early Payments As Such – Early payments and additional amounts sent each month to be taken off of the loan principal should be clearly marked for this purpose. Most home mortgage lenders prefer that you do not pay any extra because this lowers the amount of interest earned on your loan. A common complaint is that any funds paid above the monthly amount due are not credited to the principal, and many lenders will place these funds in the escrow account instead. Clearly mark the check or money order to identify that the amount is to be deducted from the principal, and then the lender has no excuse not to do so.
5. Just Because You Qualify Does Not Mean A Loan Is Right For You – Home mortgage lenders only make money when you take a loan product from them. This means that you may be offered loans that are not a good fit with your needs, because the lender is out to make money and could care less about your circumstances. It is important to evaluate each possible mortgage before making a final choice, so that you get the best loan possible for your individual situation.