YOUR GUIDE TO HOME LOANS

Learn about points 

Points, or loan origination fees or discount points, are charges that lenders add to your loan to entice potential market investors.  

1 point = 1% of your loan amount
A low interest rate with high points can be a deceptively expensive propositions
A high interest rate with low points is often the smart choice
If you choose to pay your points up front, they're tax deductible in the year you pay them

Ask about lender's fees 
 

Here are a few hints to help you avoid these "fine print" charges: 

Read all forms carefully, and always ask about lender's fees right up front
Remember that lender's fees are nt the same as closing costs
Be ready to be charged for application, document preparation, underwriting, tax work, and document review
Bear in mind that some lenders bundle their fees at one flat rate, buy many charge separately

Compare annual percentage rates 

There is a fairly simple way to effectively compare loan costs.  It's called the Annual Percentage Rate. Here's how it works: 

The APR combines the regular interest rate, points, and other incidental charges
The APR is calculated by dividing these charges by the terms of the loan for a flat annual rate
Even a loan with a low APR will contain certain lender's fees
For more information on APRs, please call, or send me an e-mail.

Consider private mortgage insurance 

It comes as a happy surprise to many that they can often get a terrific home loan and still pay less than the standard 20% down.  In most cases, these buyers will need to purchase Private Mortgage Insurance. Here are a few basics: 

PMI protects the lender against loan default
You may be able to include your first year's PMI premium in the amount of the loan
In some cases, you may be able to use part of your loan to cover certain closing costs
Though PMI has many things in its favor, it can also reduce your qualifying loan amount and limit your purchasing options

Check into FHA/DVA endorsements 

Make sure your lender has the proper endorsements. Here are a couple of points to remember: 

A DVA automatic or FHA direct endorsement meant that your lender has met all government requirements, and that their underwriter has completed all mandatory courses
You can trust a properly endorsed lender just as if you were taking your application directly to an FHA or DVA office

Lock in your interest rates 

When you find an interest rate you're happy with, it is crucial to secure that rate for the duration of the transaction. Here's how it works: 

Many lenders will be happy to lock an interest rate for you
Fees for a lock-in are generally between 0-1% of the loan amount
The length of a lock-in varies from lender to lender
Make sure that your lock-in agreement is in writing, and that it lists both interest rate and points if applicable

Be aware of penalties 

Find out up front if there are any penalties.  Pre-payment can be to your advantage if you're planning to resell or refinance. However notify your lender of your intent in writing.

Choose your lender carefully 
 

Take a good look at these pointers, if you need any help please call, or send me an e-mail., for the names of respected lenders with proven track records of results. 

Before you choose, ask people you trust if they know of any reliable lenders
Processing times vary between lenders; by making a few phone calls you can find one who meets your time constraints
Know your lender's policies before you commit to working with them
If you've already chosen a lender you don't like, change

I hope that this information has been helpful to you.  If you have questions about anything at all, don't hesitate to contact me, I'd love to help. 

Angela Burdick CRS, GRI, ABR

Call Me: 
Office: (303) 738-1380
Direct: (303) 886-1900
Email: angela@DenverRealEstateNow.com
Angela Burdick
Realty Innovations
5753 S. Prince St. Unit 753
Littleton, CO 80160

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