Valuable Loan Tips to Enhance Your Investment Potential

Once you understand the functionality of basic mortgages and the effect on your situation, you will more than likely want to look into additional loan features that might save you money by reducing interest paid over the course of the note, flexible product terms and initial money paid down. Make sure to fully investigate all your options with a trusted lender of your choosing and be aware that a good credit score and history will usually help you obtain a significantly better loan term.

  • Are you afraid that applying too many times will negatively affect your credit? Try getting free quotes online without giving too many personal details. Of course, the quote may vary when you give your actual information but it will give you a good idea of what to expect without a commitment.
  • Trying to sell your home? Have it appraised to determine the value, and consider ways that you might increase this value. Simple home remodeling projects and upgrades can go a long way by making your home more attractive to potential buyers. For example, replacing your lighting fixtures, adding a fresh coat of paint, and refinishing cabinets can help significantly.
  • While most may ignore prepayment penalties because they know they will not be able to pay off their mortgage years before maturity, it is important to know that these penalties can come into effect when refinancing. This is because the lender is basically "paying off" your current mortgage and replacing it with a new one with different terms. Be sure to ask your potential lender about prepayment penalties, which vary by state law.
  • Do not be fooled by super-low, introductory rates offered by lenders. While these rates may be attractive in the beginning, they can quickly revert to an extremely high rate. Be sure you understand the terms of the introductory rate, in order to prepare for what may come in the future.
  • Thinking about using a mortgage broker to help you find the ideal home loan for your needs? Beware of broker fees, paid by the lender, typically for referring your business to them. If a broker asks for money, you are mostly likely being taken advantage of.
  • Do you think you have fallen victim to a predatory lending scheme? Visit the website for the attorney general’s office for your state in order to find out how you can file a complaint against the lender, or see if there are any complaints from other borrowers.
  • When applying for a mortgage loan, it is vital that you are as accurate and truthful as possible. Lying about the amount of debt you have or your income is fraud and can lead to the lender rejecting your application, or may get you approved for a loan you cannot actually afford.
  • Did you know that the interest that you pay on your mortgage loan is tax deductible? In order to take advantage of this tax break, be sure to carry proper documentation that details the amount of interest that you paid throughout the year. Of course, there are restrictions to this deduction so be sure to ask your accountant for more information.
  • Are you looking for a mortgage with more flexible terms? While they may cost you more in the long run, flexible mortgages offer benefits such as no prepayment penalties, payment holidays (i.e. skipping one or more monthly payments without penalty), and may even allow you to borrow against past payments should you need fast cash for things such as home improvements or other bills.
  • When considering an offer from a potential mortgage lender, it is important to understand that rates can increase with little to no notice. Be sure that you do not deliberate for too long and miss a good deal. Similarly, rates may also go down which means that you may be able to negotiate an even better deal before signing.
  • Did you know that by breaking your monthly payment into bi-weekly (i.e. making a payment every two weeks) payments you end up making 26 payments total instead of 12, which calculates out to 13 actual monthly payments made for the year? This will drastically reduce the term until payoff, saving you thousands of dollars in interest.
  • When applying for a mortgage, many homebuyers consult with their current bank or lending institution with which they are already comfortable. While you may be tempted to accept the first offer you receive, it is a good idea to shop around with a number of different lenders to ensure that you get the best available deal.
  • As a result of the Real Estate Settlement Procedures Act (RESPA), lenders are required to present the borrower with a good faith estimate (GFE) form which outlines the rates and fees associated with the loan product. This prevents hidden fees and simplifies comparison-shopping. If you do not receive one, request one from your lender.

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