Applying for a Home Loan - What to Watch Out For
Lin Ennis
September 04, 2008
Applying for a home loan may sound like a simple process because the mortgage companies make great efforts to make it seem easy. But there are facts you should know. First, it is easy to take the first loan offer that comes along, but it may not be the one best suited to your needs. By adhering to the following suggestions, you should not only get a good deal on your home loan but also not be faced with any unwanted charges that can be added on. By looking around, you will be pleased just how much money can be saved.
Using online sites that compare all the lenders and their products can save a great deal of time. These sites allow you to compare many home loan offers at the same time. These are the cautions I would offer:
Do not apply online unless you´re prepared to receive telephone loan solicitations for the next year and email solicitations for years to come—all thanking you for your "recent inquiry."
Do not ask for a specific quote online unless you are prepared to you´re your credit checked. If you ask for a detailed quote when you apply for a loan, the lender will have to look at your credit report. Each check carried out actually lowers your credit score
Although, the interest rate is important, that is not the only concern you should have. There will be other charges that increase the costs even though the interest rate is low.
Check and re-check the terms and conditions of your home loan for clauses hidden in the small print where they are easy to miss. Some lenders place the most unfavorable clauses of the agreement in a place you might overlook, such as penalties for early payment, or the inability to add extra principal payments nay time you like during the course of the loan. You also need to see what penalties there are for late or missed payments or even the charges made if you want to arrange an early repayment of the loan.
Although it may decrease the monthly payment, don't necessarily opt for the longest repayment term just because it lowers the repayment amount. You have no idea what might happen in the future. Of course, taking out a long-term home loan is acceptable, but consider the total amount being repaid against how much was borrowed.
You´ll discover a loan even at a low 6%, if carried for 30 years will require a repayment of 215.8% -- the full amount you borrow, plus 115.8% interest.
Closing costs will be added in unless they are paid separately. Document fees and possibly even courier fees will be added. Before you applying for a loan, make sure you can afford it, this may sound simple but many people overestimate their ability to pay regular amounts. You must also feel sure that taking out the home loan will help you financially. Will it, or is that just an "old wive´s tale" that it´s always better to buy than to "throw away" money on rent? What about the amount of interest you will pay? Will that be money well spent?
Lin Ennis is the author of Let Your Mortgage Make You Rich!, a guide to paying off your home early using creative techniques that are not widely known.
Using online sites that compare all the lenders and their products can save a great deal of time. These sites allow you to compare many home loan offers at the same time. These are the cautions I would offer:
Do not apply online unless you´re prepared to receive telephone loan solicitations for the next year and email solicitations for years to come—all thanking you for your "recent inquiry."
Do not ask for a specific quote online unless you are prepared to you´re your credit checked. If you ask for a detailed quote when you apply for a loan, the lender will have to look at your credit report. Each check carried out actually lowers your credit score
Although, the interest rate is important, that is not the only concern you should have. There will be other charges that increase the costs even though the interest rate is low.
Check and re-check the terms and conditions of your home loan for clauses hidden in the small print where they are easy to miss. Some lenders place the most unfavorable clauses of the agreement in a place you might overlook, such as penalties for early payment, or the inability to add extra principal payments nay time you like during the course of the loan. You also need to see what penalties there are for late or missed payments or even the charges made if you want to arrange an early repayment of the loan.
Although it may decrease the monthly payment, don't necessarily opt for the longest repayment term just because it lowers the repayment amount. You have no idea what might happen in the future. Of course, taking out a long-term home loan is acceptable, but consider the total amount being repaid against how much was borrowed.
You´ll discover a loan even at a low 6%, if carried for 30 years will require a repayment of 215.8% -- the full amount you borrow, plus 115.8% interest.
Closing costs will be added in unless they are paid separately. Document fees and possibly even courier fees will be added. Before you applying for a loan, make sure you can afford it, this may sound simple but many people overestimate their ability to pay regular amounts. You must also feel sure that taking out the home loan will help you financially. Will it, or is that just an "old wive´s tale" that it´s always better to buy than to "throw away" money on rent? What about the amount of interest you will pay? Will that be money well spent?
Lin Ennis is the author of Let Your Mortgage Make You Rich!, a guide to paying off your home early using creative techniques that are not widely known.
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