If you’re financing a new home purchase with a mortgage, it is just important to be a wise borrower. This is to make sure that lenders or companies cannot trick you into paying more in the long run. It is best to choose the right lender and educate yourself about the additional costs associated with the type of mortgage you are applying for.
Higher Rates After Application
Disreputable lenders may offer you a reasonable rate in the application process, but then increase this after the closing. The trouble is, you may only know about this when you proceed with the purchase or within seven days of the closing date. You will then be forced to accept the new rate, as you may not want to start all over again. Mortgage companies in St George like City Creek Mortgage suggest finding a reliable lender or locking the interest rate.
No PMI in Exchange of Increased Rates
Putting less than 20% down payment requires paying private mortgage insurance (PMI), which protects the lender when you default on the loan. In some other cases, however, the lender will forego the PMI in exchange for higher interest rates. If your lender does this, know if the PMI is included in mortgage rates. Also ask them, what the rates would be if you want to pay PMI.
The Deal with Closing Costs
Getting the lowest rate may be your primary goal when applying for a loan, but you shouldn’t forget about closing costs. Note that these expenses will depend on the size and type of the mortgage, as well as your lender. Make sure that you will not pay too much by gathering and comparing loan proposals and closing costs from multiple lenders. It is also better to ask for a loan estimate.
Learn more about mortgages types and related costs to avoid getting outsmarted. Choosing the right lender also matters to avoid unnecessary costs in the future. It is also important to find out about pre-penalty payment when you want to pay the loan early in full amount.