Know Your Mortgage Costs - What Get From Your Lender Before You Sign

By Sheryl Landrum
Mortgage Credit Problems Columnist

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If you're looking to refinance your current mortgage, purchase a new home, or are just looking for a home equity line of credit or a home equity loan, you need to make sure the home loan you get is the best one you can qualify for. By following these few steps you can insure that you are getting the best loan possible.

The ABCs of Getting the Best Offer & Lowest Rates Available to You

A bad credit history will make it difficult to get the lowest mortgage or refinance rates available on the market. Bad credit loans usually have a higher interest rate than prime mortgages and they usually come equipped with pre-payment penalties as well. To ensure you are getting the best deal, always ask the loan officer who is working with you to give you these two items:
  • Good Faith Estimate--a Good Faith Estimate is the cost of your new mortgage loan. It includes any origination points you are paying or discount fees to buy-down the interest rate. Your GFE also includes the cost of lender fees, title and escrow fees, and any pre-paid taxes and insurance. If you want impounds for taxes and insurance, those costs will be estimated as well. Often there will be a difference in origination and/or discount points between a bad credit loan and a prime loan.
  • Truth-In-Lending Disclosure--this document should always be given to the borrower as well. The TIL shows the loan parameters including the loan terms, the interest rate, and the pre-payment penalty if there is one.
To ensure the best mortgage loan and to protect yourself against a really awful bad credit loan, compare lenders and make sure that you are not paying for a much higher rate unnecessarily. The money you save will be your own.

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