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What HomeBuyers Overlook

While it may sound ridiculous, many homebuyers overlook asking the lender what the interest rate on the mortgage loan will be. They are so caught up in the excitement of purchasing the home, and the anxiety of obtaining financing, they simply assume they are getting a good rate and forget to check out the fine print to make sure they really are. Quoted rates and actual rates can sadly, sometimes be two entirely different matters. Don't get stuck with an absurdly high interest rate. Make sure you take the time to verify the interest rate you're going to be paying for the next 15 or 30 years.

Read over the fine print and make sure there are no clauses on the mortgage loan that would cause the interest rate to shift or change during the course of the loan. Most fixed rate loans, are just that, fixed for the entire duration of the mortgage loan. However, in some instances, homeowners are offered one interest rate for a short period of time; usually around 3 to 5 years and after that time period is up, the interest rate changes. Now is the time to make sure you're aware of any such existing clauses.

Also, look for and ask about any tie-in clauses or requirements. Tie-in's are clauses from lenders that make requirements of homeowners such as purchasing their homeowner's insurance through a specific company, etc. The additional costs of such tie-in's and sometimes outweigh the advantages of a low interest rate. If you see anything like this in your loan package, be sure to ask about it.

Ask your lender whether your loan will be resold. While lenders cannot predict the future and may not be able to give you an answer to this question, in many cases they are perfectly aware the loan will be sold in a secondary market. Don't you think it's important to know if your lender is going to be changing right after you finalize the loan? Take the time to ask and also find out if the loan is sold, who will service the loan; the old lender or the new lender.

Finally, read over the list of closing cost fees carefully and ask about anything that is unclear or that you just simply don't understand. Don't take it for granted that all fees charged by lenders are standard or necessary. If something seems to stand out, ask about it. If you received a closing cost statement at the beginning of the loan process, and you should have, make sure what you are asked to pay at the end matches this statement.


Home Buyer Education:
Interest Rates and You

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