Applying For Your First Mortgage? Know These 3 Things

When you are getting ready to buy your home, many aspects of the buying process are new and unfamiliar to you. This includes going through a lender to get a mortgage. While the process may seem straight forward, there are subtle differences between lenders that you should be aware of. Know these 3 things to be prepared when getting your first mortgage.

Know The Final Interest Rate

A very important thing to know is what the final interest rate will be. Where the confusion comes in for first time home buyers is that there is the initial interest rate on the money that is being loaned to you, and then there are the additional fees that are rolled into the interest rate that may not be apparent until later on. This can include fees to manage the loan that will increase the overall percentage of interest paid.

When comparing mortgage lenders, make sure to ask what the APR will be, or Annual Percentage Rate. It will be the best way to compare loans, since that is ultimately the final interest rate that you will be paying for potentially the next 30 years.

Know The Penalties For Prepayment

Mortgage lenders do a lot of work to get you a loan, and their payment comes in the form of the interest being paid off over the course of many years. This is why there is often a penalty for prepayment of your loan.

Make sure the terms of prepayment penalties are clear, and if there are penalties that you know how they are determined. You do not want to sell your home down the road only to find out that there is an unexpected pre-payment penalty for paying off your mortgage. The same can apply to if you received a sudden windfall and wish to pay off your mortgage early.

Know Who Has Your Loan

Another issue with mortgage you may not be aware of is the ability for them to be sold to other lenders. While this is something that is unavoidable, make sure you know about when this can happen, how you will be notified, and if it affects how you pay your loan. For example, another lender could take over the management of the loan and require you to send payment to a new location. If you missed the letter in the mail, you could get charged a penalty for late payment.

Now that you know these 3 things, getting your first mortgage should go smoothly. To learn more, contact a company like Doolin Security Savings Bank