2 Tips to Follow When Looking For a Mortgage

The real estate market is not want it used to be in some parts of the country. This should not stop you from looking for a good deal though. If you do find that perfect deal you may need a few tips in order to find the right mortgage. This article will discuss a few tips and hints to follow so that you may find a mortgage that suits you.

Always Comparison Shop

When searching for a mortgage, make sure that you do your due diligence. Make sure that you comparison shop before committing to a specific company. A mortgage is one of the biggest commitments that you will make in your lifetime and it would be a shame to be stuck with some kind of gimmicky mortgage, searching for a refinance soon after obtaining it.

Hint:
When you are comparison shopping, always be aware of companies that check your credit scores. If at all possible you don’t want to have your credit score checked at every stop along the way. The rumor is that your credit score drops a little for every few (who knows how many) credit inquiries that are made for you. You definitely don’t want your credit score to be effected while comparison shopping.

Work the Fees in Your Favor

When choosing your mortgage, always be aware of the mortgage fees. Many times, a mortgage will come with different fees such as discount points, of course the interest rate and origination points.

Origination points are fees that are put in place to cover the cost of the lender making the loan.

A discount point is one percent of your mortgage and sort of works as a counter balance to your interest rate. The more discount points you pay the less your interest rate is going to be. For example, if you were offered a 100K mortgage with a 30 year term at a rate of 7.5% you could pay one discount point (100K x 1% = 1K) and be left with a 100K mortgage with a 30 year term at a rate of 6.5%. The 1K would be added to your closing costs.

People usually pay discount points when it is clear that they would like to stay in the property long term. If you do not plan to occupy the property for a long period of time you may want to think about whether buying discount points is really worth it. If you are looking for a loan for investment purposes then buying discount points is probably not what you want. At this point you would just be looking for the lowest loan payment possible so that your tenants can pay your mortgage and you can receive the highest return on your investment as possible.

Hint:
If you do need to pay discounts points in order to get the deal done, try to get the seller to pay them for you. These points are tax deductible and even if you get the seller to pay them they are still tax deductible in your favor.

 
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