Home Loans
California Mortgage Borrowers - How To Shop Around
(presented by www.refinance-refinance.net - mortgage lenders)
By Ben Afzal
Basics
As a borrower in California you have many loan options.
Here are some basic steps in shopping for a loan:
Decide what type of loan you want (interest only, 30 year fixed, etc.)
- Get good faith estimates
- Know how to lock your loan
- Prepayment penalties
- Decide on documentation level
Type of Loan
You need to decide if you goal is to pay down your loan or have a lower monthly payment.
If you want to pay down a loan you can get a regular loan, such as a 30 year fixed loan.
If you want a minimum payment you can go for a minimum payment option loan. This allows you to make minimum payments for an intiial period of time, often up to 5 years. The minimum payment is often lower than an interest only level. It can be a thousand dollars or more less per month than a regular loan.
Good Faith Estimates
When you apply for a mortgage you will get a good faith estimate from the lender. It is a written estimate of fees and interest rates. It is not a guarantee. Your rates or fees may change. You need to compare good faith estimates for the same loan type to make the comparison valid. They should also be from the same date, because interest rates change every day.
Your interest rate is not final until it is “locked”. This is when you are given a written guarantee of your interest rate, usually for a certain time frame. This is often for 30 days.
Prepayment Penalties
Check with your lender to see if you can get a lower interest rate if you accept a prepayment penalty. Make sure this type of penalty is acceptable. If you plan on staying in a property for 5 years a 1 year prepayment penalty should not hurt.
Documentation Level
Generally the more you document your application the better your interest rate is. This includes your income, asset, and employment documentation.
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