The Federal Reserve decided that part of helping avoid another mortgage crisis is educating consumers, so they have 5 tips on what to do when looking for a mortgage on a home you are buying or when you are refinancing.
1. Know Your Budget- Your real budget, which includes what you actually bring home after taxes, and all of your expenses, not just the ones you admit to in public. Being realistic about how much you spend each month will keep you from getting in over your head.
2. Shop Around- Check with at least 3 lenders to see what you qualify for, what their rates are, and if they offer any special programs.
3. Know the Loan Costs- Each lender will put things a little differently, and either charge you more in fees up front, or give you a higher interest rate. By knowing exactly what each one is charging will help you decide who can give you the best deal.
4. Weigh the Risks and Benefits- Because each lender determines some of the fees and rules of the loan, find out what they all are so that you can get the right loan for you. Be wary of pre-payment penalties, balloon payments, and adjustable rates.
5. Ask Home Owners You Trust- Friends and family that have recently bought or refinanced might have a good referral to give you, or a name of who to avoid. Also ask if they could go back and change something, what would it be? You can then use that as an example of what not to do.
Credit is tight now, and it can be difficult to get a loan, but if you are considering buying now or in the future, talk to a lender today, they can at least put you on the right track if they can't get you a loan now.
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