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5 Aspects to Consider Before Settling on a Home Mortgage Provider

By Jamie RichardsonFebruary 02, 2020
  • Home mortgage loans have been the solution to financing the needs of both aspiring and existing homeowners who want to put UP their property as a guarantee. A common attribute about these loans is that they involve using a house for security. Due to the increasing number of mortgage providers in the market today, some homeowners have fallen in the hands of bad people. Here is a quick overview of what you must consider when looking for a mortgage plan.

    1) Interest 

    Interest is perhaps one of the most sensitive issues when it comes to mortgage loans. Inevitably, the mortgage provider aims to get the most out of their investment. It puts you at the risk of being charged higher interest rates that are beyond the average.

    Fixed-rate mortgages are more favorable because the interest stays the same for the agreed period; it allows for predictable budgeting. Variable-rate mortgages, on the other hand, are less desirable because the provider can change the interest rates as regularly as they please. Tracker mortgages stay at a certain percentage above the base rate.

    2) Portability of Your Mortgage Loan

    You do not want to remain stuck in a particular house or town for years just because of your mortgage loan. Portable loans will allow you to move to a new home while still servicing the loan. 

    This option tends to be popular for residential builders who flip homes or build homes to sell. For contractors, a portable mortgage loan is a viable way to mortgage a newly built house and reap higher profits in the selling stage. To become a verified contractor, you would typically need to book and prepare for your exams at a recognized contractor training institute. 

    A portable loan won't be in your way if you choose to sell your first home to finance the new one.

    3) Understand the Lending Industry 

    Mutual savings banks and savings and loans are the most sought-after mortgage loans because they are more community-oriented. These financing options were once the foundation of lending and are still widely preferable for many borrowers.

    Mortgage bankers and correspondent lenders are akin to brokers of home lending solutions through reputable banks. When working with lenders, it is crucial to pay close attention because their policies can be confusing.

    Credit unions owned by their members are also prevalent nowadays because of the favorable interest rates they offer to their members. They also have fewer requirements, so it's quite easy to be a stakeholder, too.

    4) Check the Requirements

    Most lenders will need some information about you even when you are requesting estimates. To fast track this process, ensure you have all the necessary information ready for verification. You must have your employment information, at least two years of tax returns, social security number, the amount you can afford as a deposit, and bank information. 

    Typically, most lenders will present you with a loan estimate, which you will use as the basis of your choice.

    5) Read the Fine Print

    Most legal battles between borrowers and mortgage lending companies are a result of policies that the borrower failed to read. Early termination of mortgage contracts often leads to prepayment penalties. 

    Some providers of variable mortgage loans may register your loan as a collateral charge or mortgage charge, which gives them the mandate to adjust the interest rate at any time. 

    If you are having a hard time understanding the language in the fine print, seek the services of a legal expert who has experience in business law.

    Final Thoughts

    In the end, it pays to research extensively before settling for any mortgage provider.

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