Mortgage Tips, 4 things you need to know before getting a home loan.

When looking to get a home loan you need to make sure you ask the best questions to find the mortgage that best fits your desired or situation. It is essential to know certain aspects of the commitment you are going to get into prior to doing so., it's for this reason, that we've decided to give the four most important questions you must ask a bank before getting a loan:

1.Interest rate. (Amount, and is it fixed or adjustable?).

The interest rate is basically the cost of borrowing money. The interest rate is influenced by numerous factors that are related and will be different according to the type of mortgage you decide to pic. Here are the main causes involved in determining of an interest rate:
·Economic conditions.
·Inflation expectations of consumers and businesses tend to have a major impact on the interest rate.
·The mortgage term.
·A borrower's credit.
·Borrower's debt to income ratio.

When choosing an interest rate whether fixed or adjustable, it's important that you understand that fixed rates will remain the same throughout the life of the loan, while adjustable rates will go up as the life of the mortgage progresses. I would say that in most cases the rate goes up instead of to down, so buyer beware if you know what I mean.

2.Total Closing cost.

Closing costs are fees, charges and prepaid items to process your loan or mortgage. Closing cost occurs at the time when the contract is executed and the title is passed to the buyer. A variety of costs that one way or another affect the buyer and seller, need to be taken in to consideration. Closing costs are paid at the end of the closure of the loan,  hence the name closing costs. Closing costs can include an optional cost to reduce your interest rate which is optional on some mortgages. Closing cost should be about 2 to 3% of the total loan amount. Anything higher and should discard the lender and move to another lending institution.

3.Ask for a GFE (Good Faith Estimate.) Get it in writing.

Once you've completed your application for the mortgage, the lender is obligated by federal laws to provide you with an estimate of all costs to complete or close the loan within 3 days of taking an application. This is called a Good Faith Estimate.
The document in good faith that the lender has made, must contain the assessment of all costs that the borrower must pay, as well as other fees that the lender needs to close the loan.
Other estimated cost listed in the document are: the cost of property registration, application charge, mortgage insurance and title fees, etc.

4.Prepayment Penalties (what happens if you pay your loan off early)

A prepayment penalty could be a provision in the contract which says that if you pay in full a mortgage before a certain set date, you must pay a fine.
The fines are common in mortgages with adjustable interest rates, which typically have a lower rate at the beginning, but later increases.
The penalties are usually a percentage of the outstanding principal at the time of prepayment, or a few months of interest. Whatever the situation is, you need to make sure that the loan you are applying for doesn't have a prepayment penalty.
So there you have it, make sure you ask the lenders theses 4 questions prior to considering taking a loan with them. Theses question will not only help get a good mortgage but also save headaches later on.

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