2. How many discount and origination points will I pay?
Lenders may charge prepaid mortgage interest points to lower your interest rate or other points that have no benefit to you at all. Find out how many you'll be expected to pay and which kind of points they will be. Origination points are typically how mortgage companies and loan officers earn a living, and one origination point is fine if your getting a fair market rate. Often, lenders will "waive" the origination point to "save you money" (and/or make your closing costs lower), but they have to make a living... so they usually cannot give you the best rate in these cases. Increasing their margin (i.e. bumping your rate slightly) is another way for them to make their living. It's not a crime for them to make a living, just try to make sure you're not paying multiple origination points or paying one origination point AND getting a slightly higher than normal rate.
3. What are the closing costs?
Mortgages come with fees for various services provided by lenders and other parties involved in the transaction (i.e. title company, attorneys, county court house, etc.). You want to know what those fees will be as early as possible to plan ahead. Lenders are required to provide a written good faith estimate (a.k.a. "GFE") of closing costs within three days of receiving a loan application, but just ask for one and they can provide it almost any time (even a preliminary one before application, though it will pertain to your situation more after you have completed an app.). Ultimately, you can compare loans and lenders by comparing GFEs. Just make sure that you are not comparing apples to oranges (i.e. you can't compare the closing costs of a 30 year fixed mortgage with 5% down, to a 20 year fixed, 10% down, or 5 year ARM, etc.). A good REALTOR® can help make sure that you are comparing apples to apples, that lenders/Loan Officers aren't leaving out anything important, and help you differentiate between non-lender fees (such as a recording fee for your deed) and those that are unique to a given lender (like their origination or attorney fees). The differentiation of fees is particularly important as two comparative GFEs should have all non-lender fees equal to truly compare the difference in closing costs from one lender to the next.
Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com
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