March 23rd, 2017 9:11 AM by Jackie A. Graves, President
Mortgages are not cheap. Closing costs and interest paid over
time to your lending bank will make the cost of having a mortgage very pricey
over the 15-30 years that you have it. But, when it comes time to get your
mortgage, you actually have more control over your loan costs than you think (even
in the 2017 mortgage market).
Here are a few ideas on how you can keep costs
down without cutting corners.
Remember the Rate-Lock
When you apply for mortgage loan financing and agree to move
forward with the loan, there is something called a "rate lock". Rate
Locks are usually set for 15, 30, 45, or 60 days. The rate lock is a
commitment; you are committing to your lender that you are going to take the
mortgage interest rate and terms they have offered.
In turn, the lender is committing to giving you those terms with
zero changes. The big "if" in this statement is whether this rate
lock is set for a specific timeframe – 15, 30, 45 or 60 days. The average rate
lock is 30 days for most mortgages. If your loan is locked for 30 days and it
does not close by day 30, it will have to be extended in order to maintain that
rate. If the lock is extended, the cost of your mortgage can change and your
loan terms can get unnecessarily expensive. It is not uncommon for a mortgage
that started with zero points to end up with pricey discount points due to a
You can avoid this, though. The speed and momentum with which
your mortgage loan is processed is directly related to how quickly you provide
your lender with documentation and requested items throughout the process. The
longer it takes you to gather and supply these items, the more it can cost you.
You can reference the old adage, time is money.
Before You Apply
When you first approach your loan officer and/or lender about
mortgage loan financing, try to provide all of the documentation they ask for
up front and before you begin. It's also important to make sure your credit is
in good standing and there are no errors on your credit reports before you
begin the loan approval process. Doing so can help ensure you get the best
rates and terms from your lender.
Once your loan has been underwritten and you are asked to
provide additional documentation, get it back to them as soon as you can. The
longer it takes for your lender to receive these items, the higher the chance
that an extension will be needed. The ideal response period is 24-48 hours
after the request is given. If it is going to take you more than 48 hours, or
if you know you cannot get it quickly, let them know as soon as you get the
request. Do not wait the 48 hours and hope that the condition will disappear.
It will not.
Be Proactive & Prompt
The loan process is not always smooth. When items are requested
by the lender, things can get frustrating for some consumers. These are some
common comments made by consumers that come up during the process:
"I have already
provided that piece of documentation multiple times."
"Why do you need
"I am waiting on my
accountant and he won't get it back for a week."
Homebuyers can often feel frustrated because the reality of
today's lending environment was not made clear by the mortgage professional at
the beginning of the process. If you are the type of consumer that understands
that 5+5 will always equal 10 in any situation, prepare to be disenchanted by
the mortgage loan process. In the current mortgage market, 5+5 will equal 10,
11, or 0. The environment you are entering is bureaucratic and heavily reliant
on compliance to rules and regulation. These can often seem redundant and
unnecessary but, remember, they were put in place to protect you.
If you can step back from the frustration and provide the items
quickly, not only will you be ahead of the game but you will be saving yourself
time and money. If you are prone to providing pushback to your lenders on
requests, know that you are costing yourself in time, effort, and money.
Ask for clarification, call your lender, get on their calendar,
bite the bullet and you will maintain control of your costs. The way to make
sure you are set on the cost of your mortgage is to lock in the interest rate
and terms, provide documentation within 24-48 hours, and be on call for any
updates that your lender has.
There will always be circumstances beyond your control, but
being proactive and on top of what your lender needs is the number one way to
stay in control of your financial mortgage success.
Trying to buy your first home? Check out our roundup of first-time
homebuyer mistakes you'll
want to avoid and visit
our mortgage learning center for
more answers to questions that come up during the process.
By Scott Sheldon - To view the original article click here