Understanding Your Mortgage Loan
Sep 4th, 2007 @ 1:51 PM by MortgageMentor
Do you fully understand all the terms of your mortgage?
Often when loan officers do not disclose all the aspects of the loan and its closing costs, the homeowner is the one who loses – as we’ve recently seen in the rising mortgage debt crisis.
If you feel that you don’t understand the loan, ask questions. Don’t be afraid to stop the lender and ask him/her to explain it all to you. These questions will also help you avoid a bait-and-switch, a common ploy with some unscrupulous lenders.
For the best results:
Do not assume anything. If you don’t see it in writing, it’s worth asking about. If you were responding to a particular advertisement, carry a copy of it with you. Compare the details and be sure you got what you thought you were getting.
Ask, ask, ask. Your loan payment amount may include closing costs, PMI, and taxes. It may be interest only. Or not. You need to know.
Other important points to consider:
- What is the industry name for my loan program?
- What amount am I borrowing?
- What is the interest rate? How many years will the rate remain fixed?
- How is the rate calculated when it adjusts? What index is used? How often does it adjust? What is the rate cap?
- Will my loan ever have negative amortization?
- Is there a penalty for prepayment? What is it?
- Will you guarantee the rate and terms in writing?
By taking the time to ask important questions, you won’t get caught off guard—and you just may save your home, as well as your credit rating.
- Posted in Mortgages, Personal Borrowing
- Permalink
- 1 Comment »
Welcome aboard, Tanya! Great post…
Charlie~