- Personal Finance
How To Get The Right Mortgage!
Weeks of looking for just the right house can be destroyed in minutes by getting the wrong mortgage.
If you want to make a banker laugh (no, I can't imagine why you would, but if you did ... ) just repeat to him that oft-repeated real-estate agent cliche, "A home is the biggest investment most people make in a lifetime."
Odds are he'll correct you: "No, a home is not the biggest investment most people make. The mortgage is." (I didn't say it would be a big laugh.) But the point is, he'd be right.
Unless you're one of a handful of people who can walk up to a home seller with a suitcase full o' cash, you need a mortgage to buy a house. And, by the time all the payments are made, the $250,000 you agreed to pay for a home will actually end up being closer to $530,000, with most of that going to the lender in the form of interest on the loan.
A lot of money? For sure. Does it have to be that way? For most of us, yes. But you don't have to be a helpless lamb among the financial wolves. Attitude is everything, and your attitude should be: A mortgage is not something you "get," it's something you "shop" for. And, for more and more people, shopping for it on the Internet presents an opportunity to save money, though not for the reasons most people think.
What was good advice before the Internet is still good advice today: Shop around. Don't talk to just one lender, talk to three, talk to five, talk to as many as you can. The truth is that most people only talk to one lender and take the package he says is best for them. The Internet has made comparison shopping infinitely more feasible than it was a decade ago when you had to drive from one mortgage office to another.
There are lots of mortgage Web sites out there to search through. A quick Google search will come up with dozens if not hundreds in your area. Remember that just because you see a great low rate on the Internet doesn't mean you should pounce on it. Once you've got the information, why not turn to your local lender and ask him if he can do as well or better? See if they're willing to earn your business.
A couple of mortgage terms that home buyers should keep in mind:
- Pre-qualification is a pre-loan process during which your real-estate agent or loan officer has taken a general look at your finances and figured how much house you can afford. But it's not a guarantee that somebody will loan you the money. So when you find your dream house and make an offer, you'll still need a contingency in the offer that essentially says, "We'll buy the house if we can get financing."
- Pre-approval, the better option especially in a market where homes sell quickly, is the financial equivalent of a suitcase full of cash. It means a lender has taken a thorough look at your finances and agreed, in writing, to loan you a specific maximum amount. That means no financing contingency on your offer, which probably will put you a notch above other buyers competing for the same house.