Buying a home is often one of the most important financial decisions in life. However, while most people focus on finding the most attractive home or getting an attractive interest rate, There are details within the mortgage process that can go unnoticed and end up costing thousands of dollars.. Knowing these practices can make the difference between getting a good loan or paying much more than necessary for years.
Although the rules for granting mortgages are much stricter today than before the 2008 financial crisis, that does not mean that all buyers take advantage of the best conditions available. In many cases, the problem It is not an illegal practice, but decisions that consumers make due to ignorance or because the process is exhausting.
1. The first offer is almost never the best
One of the most common mistakes occurs from the first contact with a lender. It is common for the telephone conversation to last several minutes while the advisor seeks to build trust and learn personal details. The problem is that, After investing so much time, many people feel that starting over with another bank represents unnecessary effort. Precisely, that is part of the sales strategy: to tire you out so that you no longer look for more and better options.
“They certainly want the conversation to be long and drawn out. ‘What kind of pets do you have? What are your kids’ names?'” Shawn Malkou, senior agent at X2 Mortgage, told Bankrate. “If that takes 30 minutes to an hour, that person will hang up the phone and say: ‘Wow, I don’t want to spend another hour on the phone talking about mortgages’“.
Comparing deals is still one of the best ways to save money. A difference of just a few tenths in the interest rate, along with lower closing costs, can add up to thousands of dollars over the life of the loan. Therefore, specialists recommend requesting at least three quotes before making a decision.
2. Ignore Down Payment Assistance Programs
The high price of housing has made the down payment one of the main obstacles for first-time home buyers. What many do not know is that There are thousands of assistance programs promoted by state governments, cities and other organizations.
According to Down Price Handy resource, The average financial aid that beneficiaries receive in the United States is around $18,000 dollarsalthough some programs offer much larger amounts depending on where the home is located and the buyer’s profile.
Despite this, many applicants never receive this information.
“Home buyers never get into the system because the loan officer discourages them from the get-go.”said Rob Chrane, executive director of Down Price Handy Resource.
Applying for these supports requires additional time, first-time buyer courses, and more documentation. However, this effort can considerably reduce the money a family needs to purchase a home. Before discarding this option, it is worth checking out the programs available in the statethe city and even with the employer, since some offer little-known benefits.
3. Commissions can also make your mortgage more expensive
Many buyers only compare the interest rate and leave aside another equally important aspect: the fees charged by the lender.
After the mortgage crisis, many abusive charges were limited, but they still There are expenses that some institutions decide to pass on to the client and others simply absorb. These may include credit checks, flood zone certifications, tax services, express shipments or bank transfers.
“You should find all those commissions on the transaction sheet or summary. None of them individually amount to thousands and thousands of dollars, but together they add up to thousands of dollars“explained Jeffrey Ruben, president of WSFS House Lending at WSFS Bank.
For that reason, Experts recommend reviewing the annual interest rate (APR), since it incorporates a good part of these costs and allows you to compare the true price of a loan beyond the advertised rate.
Before signing any document, It is advisable to take a calm look at each charge included in the closing costs and ask which ones can be negotiated or eliminated.. A few minutes of review could translate into significant savings over the next 15 or 30 years, which is how long many families will remain paying their mortgage.
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