First you need to understand who you are dealing with and how it works. There are mortgage lenders, mortgage brokers, and loan officers. Mortgage lenders are companies that are actually providing the money to fund your loan. Mortgage brokers are state licensed to sell you a mortgage. Loan officers work below mortgage brokers as their sales representatives.
When shopping for a mortgage you first need to understand that, although comparing rates is important, you shouldn’t have your credit ran by more than a few places. It is a common estimate that each time your credit is pulled from the credit agencies that you lose a point. Although in most situations this isn’t too important, should you be a person that is on the border between different credit ratings, it can affect certain people negatively.
Next, there is a difference between your APR and your interest rate. The interest rate is the actual rate of interest you are paying on your loan. The APR is your interest rate plus the fees included in your loan. It is very important to look over your APR break down to make sure you are not being over charged. This is a common tactic mortgage brokers use to produce higher commissions.
Generally, mortgage brokers are upfront with their commissions and how many “points” they are making on the loan. When a mortgage broker says point what he means is percent. To clarify, 1 point is 1 percent of the loan amount. Now, it is also possible for a mortgage to have back end points. This is when a mortgage broker adds points that you pay over the length of your loan rather than up front with closing costs.
Finally, prior to signing your loan paperwork, you should have a professional you can trust look over it. You are generally required to have your signing with a notary public, however, the notary is hired by the mortgage company you are obtaining your loan from so even their opinion can be bias.
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