Tag Archives: Mortgage

Mortgage Application: Don’t Forget Fees and Penalties

Loan on the monitor of a macbookWhen applying for a loan, most borrowers tend to focus more on their down payment, interest rates, and monthly payments. Many fail to evaluate hidden fees like closing costs and prepayment penalties. If you’re applying for a mortgage and don’t think about them, you may set up yourself for extra expenses before you can finally own your home.

Avoid Surprises Related to Closing Fees

Whether you’re purchasing a home or refinancing a loan, you will need to pay closing costs. A lender or mortgage company should give a Good Faith Estimate (GFE), which lists all related closing costs. Altius Mortgage Group and other mortgage companies in Utah note that these differ based on the type of property, its location, and your loan type. In most cases, buyers pay about 2% to 5% of home’s value in closing fees.

It’s good to know that some fees in the closing costs are unnecessary and negotiable. You can ask your lender to have some of those fees removed or ask them to explain why they are necessary. There is also the no-closing cost mortgage, which may cost you more in the long run. This is because the lender may charge you with a higher rate or include the closing fees into the total loan amount.

Extra Payments and Penalties

Some loans carry prepayment penalties when you may extra mortgage payments. Note that not all loans have this, so it means that you may have agreed on this when you close the purchase. If you’re not sure, it’s best to check with your lender. The penalties could apply if you pay the entire balance (by selling or refinancing) or pay a large amount all at once.

If you, for instance, received an inheritance or get a promotion, making extra payments can reduce financial burden in the long. This also reduces your total payment and helps build equity faster. Before agreeing to a loan, you may want to ask your lender to have this removed if possible. Note that paying extra can also lower the number of interests paid.

Buying a house is a financial decision, so you shouldn’t overlook other fees that can affect your payment in the future. Talk to a reliable lender to learn more about your mortgage options and all other associated fees.

Factors to Consider When Looking for the Best Mortgage for You

MortgageA mortgage takes many years to pay in full. Thus, you have to make sure that you find one that you can manage well.

Getting the best mortgage rate in Salt Lake City would be an advantage. But, there are other factors to consider. Here are some of them:

Mortgage Type

There are two main types: fixed and adjustable rate mortgages.

Fixed Rate Mortgage – The interest rate remains the same throughout the term of the loan. It allows you to budget your payments. The downside is when there is a general decline in interest rates. Interest on your loan does not go down.

Adjustable Rate Mortgage (ARM) – At the start of the loan, the interest rate for an ARM is often low. It will then fluctuate throughout the rest of the term. You will pay less if the prevailing interest rate goes down. If it rises, you will pay more. 

Lender

It is best to compare offers from different lenders. Interest rates and terms may vary from one lender to another. Compare mortgage products with the same features to make sure you are getting the best offer.

Mortgage Rates

Various factors influence the interest rate on a mortgage. These include economic and market conditions, as well as your financial profile. You can qualify for preferential rates if you have an excellent credit score and a steady job.

Mortgage Fees

Aside from interest, other costs come with a mortgage. These may include loan administration and processing fees. Thus, it is also important to consider the “junk” fees when comparing mortgages.

Lock Period

Offers from lenders are only good up to a given period. Interest rates are locked-in during this time. Beyond the lock period, the interest may go up or down, depending on prevailing conditions.

Consider these factors when looking for the ideal home loan to get. This will help you land the right mortgage for you.