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Boise Home Loan Information

It is important to remember that banks are like most companies; they sell a product and compete for business. That holds true for getting a home loan as well. When you shop around for a home loan you are able to get the best deal possible. By comparing the costs and negotiating you may save thousands of dollars. Before beginning the home loan process it is important that you obtain a copy of your credit and review it for accuracy and completeness. Access your credit report from the big three major credit bureaus, Trans Union, Experian and Equifax all on one easy to read report. Start here

Shop for a Home Loan

When shopping for a home loan you may discover that there are several types of lenders that are willing to help you. It is a good idea to check out as many as you feel necessary to get the home loan that fits you best. Different lending institutions may quote you different prices, so you should contact several lenders to ensure you are obtaining the best price. Following is a list of institutions that offer home loan and mortgage products:

Commercial Banks
Credit Unions
Mortgage Companies
Thrift Institutions

Mortgage Brokers

Mortgage brokers can come in handy because they typically contact several lenders and get mortgage information for you however they are not obligated to find you the best deal unless you have contracted with them to act as your agent. You may discover the lender you are working with is using a broker or you may choose to work with a mortgage broker yourself. If you decide to go with a broker it is a good idea to contact more than one. Brokers are usually paid a fee for their services and you should be prepared to negotiate with the brokers as well as the lenders.

Home Loan Cost Information

When shopping and comparing home loans from several brokers and lenders you need to find out the costs involved and know how much of a down payment you can afford. When comparing the costs make sure you are comparing “apples to apples” by inquiring about information on the same loan amount, type of loan, and loan term.

Home Loan Rates

When discussing interest rates ask about whether the rate is fixed or adjustable. Keep in mind that when interest rates are adjustable and the rate goes up so can your monthly payment. It is also a good idea to find out what happens if the rate goes down, will your payment go down as well? Ask about the loan’s APR (annual percentage rate). The APR may take into account the interest rate, broker’s fees, other charges, and points expressed as a yearly rate.

What are Points?

Points are fees charged by the broker or lender for the home loan and are often tied to the interest rate. Ask for the points to be quoted to you as a dollar amount rather than a number of points so you know how much you will be required to pay.

Home Loan Fees

There is a long list of fees associated with obtaining a home loan. You should be able to get a reasonable estimate of the fees by asking the lender or broker. Some fees are paid up front and some fees are paid at closing. You also may be able to include some of the fees in your home loan but this will make your monthly payment slightly higher. Some common home loan fees include:

Broker Fee
Transaction Fee
Document Preparation Fee
Loan Origination Fee
Underwriting Fee
Appraisal Fee
Credit Report Fee
Settlement Fee
Closing Costs

Many of the fees can be somewhat confusing so ask for clarification if you don’t understand. Also some lenders or brokers may lump fees into one category so ask what each fee includes.

Down Payment Requirements and Private Mortgage Insurance

Before talking to a lender or broker about getting a home loan it is important to know how much you can afford to put down. Part of what you plan on putting down on your home may be needed to pay fees associated with the home loan however this is something that can be discussed with a lender. Ask the lender what their down payment requirements are and what you need to do to verify that you have the funds available. Also inquire about special programs that are available.

Many lenders may require 20% of the purchase price as a down payment when buying a home. This has changed considerably over the years and now there are many different options available to home-buyers. There are conventional loans out there that require 5% or less so check around. If you are unable to put the full 20% of the purchase price down then the lender may require you to carry PMI (private mortgage insurance) on your home loan, however there are creative lending options available that may work around having to carry PMI. If private mortgage insurance is required find out how much your monthly payment will be with it included and the total cost of the insurance. You will also want to ask how long you will be required to carry the PMI.

Negotiate You Home Loan

Upon completion of shopping around for a home loan and comparing the relevant data it is time to begin negotiations. On any given day, lenders may offer a different price for the same home loan terms. The reason for this is because loan officers are often allowed to keep some of the difference as extra compensation. Being well informed and equipped with the right information you can negotiate the best deal possible, especially since lenders are competing for your business.

Have the broker or lender write down all the costs and fees associated with the home loan. Ask them if they will waive or reduce one or more of the fees. You will want to make sure if one fee is lowered another is not being raised. There is nothing wrong with asking lenders or brokers for better terms than the original ones they quoted you.

Get It In Writing

Once you are satisfied with the home loan terms you have negotiated you will want to get it in writing, written lock-in. The lock-in should include the agreed upon rate, how long the lock-in is in effect, and the number of points to be paid. And guess what, a fee may be charged for locking in the loan rate but it is worth it to have in writing. Obtaining a written lock-in can protect you from interest rate increases while your home loan is being processed. However the opposite can happen if rates drop and you will wind up having to pay more though you may be able to negotiate a compromise with the lender.

Obtaining a Home Loan if You Have Problems with Your Credit

Just because you have had problems with your credit in the past don’t assume you will not be approved for a home loan. Many circumstances that caused the credit problems can be explained to the lender or broker. If the credit problems can’t be explained you will likely have to pay more interest than if your credit was in better condition.

Depending on the problems with your credit you may choose to wait in obtaining a home loan until after you have taken the necessary steps to improve your credit. Services such as (link to affiliate goes here) can assist you in that process.

Whether you have credit problems or not it is a good idea to review your credit report for accuracy and completeness before applying for a home loan. Improve your Credit Score

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