Shopping for a mortgage? Read these tips first
Posted
May 01 2008, 03:49 PM
by
Karen Datko
It used to be that if you wanted to buy a house, you simply talked to a lender. "This is nice, if you have an honest, unbiased broker," writes Jonathan at My Money Blog. "This is also how people got talked into 0% down, subprime adjustable-rate mortgages."
If you are thinking about, saving for or on the verge of buying a house, we strongly recommend that you read Jonathan's two-part series on shopping for a mortgage. We've been through the house-buying process three times and wish we could have read these posts before we did.
Part One explains the pitfalls you can encounter while mortgage shopping -- does the old bait-and-switch sound familiar? -- as well as the types of mortgages available and the paperwork you'll need. Finally, he explains how to identify potential lenders.
Now comes the tough stuff, in Part Two. He walks you through the process of narrowing down your list of lenders by examining rate quotes and the fees that will be included in a good faith estimate, and explains how to negotiate to lower or eliminate some of those fees. Ask lenders if they will guarantee the fees. At this point, you'll have enough information to pick a lender.
"Now, send these lucky folks all your information -- application, credit report, supporting documentation, etc. -- and ask for a loan-approval letter, official GFE, and truth-in-lending statement within 72 hours," Jonathan writes. "If you get all this, you can finally breathe --you have a loan!"
Hold the phone. You're not quite done yet. Lock in the interest rate if you haven't already. See if your second choice will match the offer, in case you need a backup. Request the HUD-1 form 24 hours before closing, and then triple-check the form before you sign to make sure nothing has changed.
