Before you sign the dotted line, ask your mortgage broker these questions.
Signing a mortgage is a big commitment that comes with stack of paperwork to sort through. If you feel unsure about some information, be sure to ask your mortgage broker before you commit. It’s imperative that you know what you are getting into before you sign.
What is the ARP?
It is important to note that the interest rate and annual percentage rate are different. As many people might not understand the difference between the two, a lender may advertise low-interest rates for a mortgage that holds a higher ARP. When comparing loan rates, factor in the ARP as well as the interest rate!
Is there a prepayment penalty?
If you pay off your mortgage early or refinance into another loan, you may face prepayment penalties. These fees can typically cost between 2% and 4% of the overall loan and usually applies to borrowers who repay their mortgage in less than five years. Talk to your broker to clarify terms and conditions around this clause.
Can we review the GFE and HUD-1?
By law, you are required to receive a Good Faith Estimate within three days after your lender has accepted your loan application. This gives you a reasonable estimate of the loan terms and the settlement charges. The HUD-1 document is what you will receive at the closing table which itemizes the credit, escrow fees, title insurance, loan origination fees, attorney fees, and rate lock fees. To fully understand the arrangements and expectations, you can review these two documents with your real estate agent or mortgage broker.
To aid the process of taking out a home loan, visit the strategic home loan specialist, Andraya Coulter. I serve Pleasanton and the surrounding Northern California areas, and can help you buy your home this year! Contact me today.