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Tips
General
- Be sure to get pre-approved
or pre-qualified before you start shopping for a home.
It will increase your buying power and expedite the loan
process.
- If you are worried about interest rates
rising between the time you apply for your loan and closing,
you can “lock-in” the rate. Be sure to check
for extended lock options which will allow you to lock the
rate for up to 180 days and float down options, which will
give you a lower rate if it is available at the time of
closing.
- Be sure you have read and understand all of your loan
documents before you sign them. If you have questions about
the terms or conditions, look them up in our glossary
or ask your Gershman loan officer.
Choosing a Mortgage
- Consider a mortgage that allows you to pay additional
payments over the life of the loan. Making an additional
payment per year on a 30-year loan may allow you to pay
off the loan in approximately 18 years.
- When comparing loans, look at the annual percentage rate
(APR), which reflects the interest rate, points, origination
fees, and mortgage insurance.
- When comparing adjustable
rate mortgages, look at the margin, index, and caps
to get a true feel for the cost of the ARM. Find out how
the index has fluctuated in the past and how often it will
change.
- If you choose an adjustable
rate mortgage, check for payment caps. If the amount
of interest owed during a period exceeds the payment cap,
the difference will be added to the principle leading to
negative amortization. Check to find out if caps are available
on negative amortization.
- Find out if the mortgage has penalties for prepayment.
Look for a loan with no or low prepayment penalties, which
would allow you to save money by paying off the loan early.
Establishing Credit
- Several months before you begin the mortgage process,
contact the major credit bureaus to check the accuracy of
the record. If you find mistakes or errors, contact the
credit bureau as soon as possible. The three main credit
bureaus are: Equifax, Experian, and TransUnion.
- Always pay your bills on time. If you tend to forget,
consider setting up automatic payments from your checking
account.
- Avoid overextending your credit. Keep balances well below
available credit limits.
- Limit the number of inquiries into your credit history.
Each time a credit report is requested, it is recorded in
your credit history.
- If you have had a bankruptcy or foreclosure, take time
to re-establish credit before applying for a mortgage. Negative
items on a credit report carry less weight if they occurred
several years earlier.
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