Check your local newspaper for information about
rates and points currently being offered.
Ask for points to be quoted to you as a dollar amount-rather than just
as the number of points-so that you will actually know how much you will
have to pay.
A home loan often involves many fees, such as loan origination or under-writing
fees, broker fees, and transaction, settlement, and closing costs. Every
lender or broker should be able to give you an estimate of its fees. Many
of these fees are negotiable. Some fees are paid when you apply for a
loan (such as application and appraisal fees), and others are paid at
closing. In some cases, you can borrow the money needed to pay these fees,
but doing so will increase your loan amount and total costs. "No
cost" loans are sometimes available, but they usually involve higher
Your first information about mortgages probably will come from newspaper
advertisements placed by builders, real estate brokers, and lenders. Although
this information can be helpful, keep in mind that the ads are designed
to make the mortgage look as attractive as possible. These ads may play
up low initial interest rates and monthly payments, without emphasizing
that those rates and payments later could increase substantially. So get
all the facts.
A federal law, the Truth in Lending Act, requires mortgage advertisers,
once they begin advertising specific terms, to give further information
on the loan. For example; if they want to show the interest rate or payment
amount on the loan, they must also tell you the annual percentage rate
(APR) and whether that rate may go up. The APR, the cost of your credit
as a yearly rate, reflects more than just a low initial rate. It takes
into account interest, points paid on the loan, any loan origination fee,
and any mortgage insurance premiums you may have to pay.
Ads may play up low initial rates. Get all the facts.