MORTGAGE TIPS

The annual percentage rate (APR) is an interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage because it take

Ask if you have the option of paying fewer or no points in return for a higher mortgage rate on your loan. This will increase your monthly payments, but require you to come up with less cash at closing.

Ask how much PMI will cost and how you’ll be expected to pay it (usually added in with the monthly payment). Ask if you’ll have to pay the full first year’s premium at closing.

One strategy to avoid paying PMI? For qualified borrowers, there is a piggyback mortgage. In this situation, a second mortgage or home equity loan is taken out at the same time as the first mortgage. Ask us about these. In addition, some credit unions can waive PMI for qualified applicants. Either way, you can request the cancellation of PMI payments once you have built up at least a 20% equity stake in the home.

Red-flag issues for mortgage underwriters include:

• Bounced checks or NSFs (Non-Sufficient Funds charges)
  
• Large deposits without a clearly documented source
  
• Monthly payments to an individual or non-disclosed credit account
  

1. Don’t apply for new credit. Your credit can be pulled at any time up to the closing of the loan.

2. Don't miss credit card and loan payments. Payment history is one of the most important factors in your credit score.

3. Don’t make any large purchases. As a general rule, wait until after you close on the mortgage to consider big purchases.

4. Don’t switch jobs. This might be out of your control, but it’s wise not to actively change jobs during the loan-approval process.

5. Don’t make large deposits without creating a paper trail. If a loan officer sees large deposits, typically over $1,000, she must be able to trace their origin. Anything that isn’t clear must have an explanation.

• Looking for a home before applying for a mortgage.
  
• Talking to only one lender.
  
• Buying more house than you can afford. Moving too fast
  
• Draining your savings.
  
• Being careless with credit.
  
• Fixating on the house over the neighborhood.
  
• Making decisions based on emotion.
  
• Assuming you need a 20 percent down payment.
  
• Waiting for the ‘unicorn.’
  
• Overlooking FHA, VA and USDA loans. Miscalculating the hidden costs of homeownership.
  
• Not lining up gift money.
  
• Not negotiating a homebuyer rebate.