Selective Mortgage Decision Making
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Smart Mortgage Decision-Making
Summary:
Don't accept the first mortgage offer you receive. It's crucial to understand the terms and compare offers from multiple lenders.Key Concepts:
- Mortgage Foreclosure- Mortgage Refinancing
- Second Mortgage
- Mortgage Companies
Article:
A recent article on IndyStar.com highlighted that Indiana and Ohio have the highest rates of home mortgage foreclosures. While there are various reasons for this trend, a key factor in preventing foreclosure is thorough mortgage planning. Although unexpected medical expenses or job loss are sometimes unavoidable, you do have control over your mortgage decisions. Making informed choices about refinancing, second mortgages, or home purchase loans is essential for avoiding financial trouble. Keep these tips in mind when considering a mortgage:
Think Independently:
You've likely heard the saying, "If your friend jumps off a cliff, would you jump too?" It means think for yourself?"an approach that applies when negotiating with a loan officer. Just because you're approved for a particular loan amount doesn't mean you should accept it without question. Today's lending standards often allow for higher debt-to-income ratios and less stringent documentation, resulting in more approvals. Remember, you are responsible for the payments, not the loan officer. If the payment isn't comfortable for you, don't accept the loan.Understand Your Mortgage:
It's crucial to grasp the terms of any mortgage refinancing, second mortgage, or home purchase loan you’re considering. Here are some key questions to ask:1. Is the interest rate fixed or variable?
2. Is the loan interest-only, deferred interest, or fully amortizing?
3. Is there a prepayment penalty?
4. Are there balloon payment features?
5. Are property taxes and homeowners insurance included in the payment?
If your loan officer is unclear or evasive about these questions, consider finding someone else.
Shop Around:
Consult with two to three loan officers to explore your options for refinancing, second mortgages, or home purchase loans. You'll encounter a range of expertise and skills among loan officers. More than three consultations can lead to information overload. In addition to comparing interest rates and closing costs, evaluate each officer’s integrity, knowledge, and experience.These straightforward, common-sense guidelines are often forgotten amidst the excitement of securing a home loan, refinancing, or obtaining a second mortgage. Keep them in mind to make informed decisions.
Source: IndyStar.com, March 18, 2006, "Foreclosures in Indiana Hit New High" by Ted Evanoff
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