Finance & Mortgages

The Ins and Outs of Mortgages

You’re finally ready to buy the home of your dreams. Now... it’s time to start thinking about pre-qualifying and securing your mortgage.

With so many choices, how do you know you’re making the right ones?

According to the (Re)Finance Center, the first, most important step is not just the prequalifying process, but the more complete preapproval process.

The pre-qualification process is described by the (Re)Finance Center as the question and answer interview process buyers go through with a loan officer—resulting in a "pre-qual" letter.

The pre-approval process, on the other hand, involves the mortgage company doing the same work as for full approval, except for the appraisal and title search. Once you are preapproved (at little or no cost to you), you become like a "cash buyer" and have more negotiating power with the seller—and can save thousands of dollars!

Most reputable realtors, stated the (Re)Finance Center, will not show homes to you, the buyer, until you are pre-approved, because they feel it’s a waste of both your time and theirs.

Inexperienced home buyers should also make sure all verbal commitments are put into writing by their agent; in fact, written contracts almost always override verbal contracts. This also holds true with getting a written goodfaith estimate from your lender.

Other points to keep in mind include the following: 1) Choose a lender with the most favorable rates or fees; 2) Get a written statement from your mortgage company detailing the interest rate, the length of the rate lock, and details about the program; 3) Use your own agent, not dual (buyer/seller) agents; and, 4) Read all documents before signing them.

Licensed mortgage broker Margaret Mullen of Mullen & Neier Florida Mortgages, Inc. in Jupiter, emphasized that the most important thing to remember when shopping for a mortgage is that there are many different programs, all with their own rates—and that every buyer needs to find the program right for him or her.

"Everyone has their own circumstances and needs to work with someone who is going to look at the whole picture, not just quote a rate and closing costs," said Mullen.

She expressed that the first step is to discuss your situation with a professional. "Give them all the details of your credit, income, payment requirements, and length of time you’ll be keeping the home."

Mullen added that interest rates are still low—averaging 6.5 on a 30-year fixed, 6 percent on a 15-year fixed.

"As far as rates going up, I feel that they may fluctuate up and down, but will remain somewhat stable for the time being."

And, last but not least, Mullen cautioned home buyers to be careful of low quotes on closing costs and interest rates.

"If it sounds too good to be true, it probably is," she concluded. "Many brokers/lenders will quote low to get the application, and the customer will not see the changes until they are at the closing table.

"So, work with someone who gives you all of the details and who you feel you can trust!"