Don't forget that you wouldn't buy the first house you saw, so why take the only mortgage you can get? Ask for more than one quote about good faith. Check out the options that different lenders offer. Make sure to ask the lender not to pull your credit report but to give you a good faith quote based on the paper credit report you will bring to him.
Know what's on your credit report. And don't get your credit report through the Internet. Most people order their credit report online, and sometimes they even get their free report. What they don't realise is that this hurts their credit history because pulling their credit score more than once will lower their score. And if you pull it and then the mortgage company pulls it again, it will be pulled more than once. Instead, you should call the 1-800 numbers of the credit bureaus to order your credit report. Be careful, because they will try to tell you to get it on the internet. Instead, be patient, stay on the line, and ask for a written copy. This will be the real copy of your credit report. This is what the mortgage company will actually look up.
You might want to use a mortgage broker. Yes, you will have to pay an extra fee, but if you get the right type of mortgage loan, that fee will often be worth it. A mortgage broker will help you find several different loans from which to choose. Then you can choose the one that works best for you.
When you go to a bank or mortgage broker, make sure they don't sell you a loan with a higher interest rate than you qualify for. Many banks will pay a broker to sell a higher mortgage rate to a customer. This is known as YSP, or Yied Spread Premium. So, if you can get a loan with an interest rate of 6 percent but your broker or bank sells you a loan with a rate of 6.5 percent, the bank is making more money. Look for a line that says "YSP" on your documents. If it is positive, it means that you are not getting the lowest interest rate you are eligible for.
How do you stop it?
Be honest with your broker or banker and try to work something out. If you were able to negotiate the price of your home, you should be able to do the same with your mortgage. Every fee on a mortgage can be talked about. Taxes, filing fees, and insurance fees are the only things you can't talk about. Get a copy of your good faith estimate, take it home, and start looking into all the fees the bank or broker is trying to charge you before you decide. Tell him what you've discovered. You'll soon find out that he makes changes pretty quickly. When you use a broker, tell him you are willing to pay up to a half point in origination fees but don't expect to pay any back end fees. He'll know what you're talking about.
Last, be sure to read your closing papers very carefully. In fact, you should ask to have a lawyer there. It's always better to be safe than to have to apologise later. It is better to pay a few hundred dollars now to talk to an attorney than to spend thousands of dollars later on things you shouldn't have to pay for. Many brokers and banks feel uneasy and like it takes too much time. In general, and most of the time, the lawyer doesn't find anything wrong with the closing arrangements. But you know what Murphy's law is all about. If you don't do things the right way, something might go wrong.
When things are set up like this, it's not smart to try to save money. In fact, you should always have your home checked. You will be sorry if you don't do things. Spending a few hundred dollars up front is always best. But you don't want something BIG to go wrong in the middle of the loan.
