| A loan is basically a product and like all products, its | | | | officer that lists the lowest rates of all his products. |
| sales pitches can be exaggerated. The end result is | | | | Regulation Offers Some Protection |
| that you end up with a loan that may not suit your | | | | The Real Estate Settlement Procedures Act (Respa) |
| needs at all. When shopping around for the best | | | | lays down that lenders must give an accurate |
| mortgage rate that is most suitable for you, one needs | | | | estimate of closing costs at the time of submitting your |
| to be highly discerning with exactly what is being | | | | application. Extra charges are in violation of the law. |
| offered. | | | | Nevertheless many banks often try to slip them in. |
| Short-Term Adjustable Rate | | | | Insist on a detailed list of closing costs. If you find any |
| Many consumers make the common mistake of | | | | suspicious or unnecessary charges, you have the right |
| choosing a one-year adjustable rate mortgage due to | | | | to ask your loan officer for an explanation. |
| the deceptively low rate being advertised. Deceptive, | | | | While it may be advisable to seek recommendations |
| because, in the very next year, the rate shoots up. | | | | for mortgage lenders, you need to be careful if the |
| It is most important that you keep in mind that it is not | | | | advice comes from a real estate agent. With estate |
| in the best interests of lenders to offer you a loan with | | | | agents, it is more likely that instead of referring you to |
| the lowest possible interest rate. Typically they would | | | | the best deal possible, they send you to the lenders |
| prefer you to opt for the highest rate you could | | | | who pay them a commission for doing so. |
| possibly afford. Doing so will ensure that in addition to | | | | Mortgage brokers will often mislead you with pre |
| their regular commission, mostly one percent of the | | | | approvals. They lead you to believe that a pre |
| loan amount, an overage of an extra one or two | | | | approval practically guarantees you the mortgage. |
| percent is earned for selling you a loan priced higher | | | | However, at the actual time of getting approved for a |
| than the most favorable deal for you. To avoid this | | | | mortgage, these pre-approvals are of no value and |
| situation, insist on the daily rate card from your loan | | | | may as well be wastebasket approvals. |