Your mortgage payment is probably the biggest expense you have. But most borrowers do little to nothing to shop around and negotiate the best deal. In the end, it means home buyers could end up paying much more for a loan. In Terravita Scottsdale, one of the neighborhoods I sell homes in, I like to advise buyers to proceed with caution. I also found some advice in realtytimes.com that could save you money.
For one, don’t always believe advertised rates. Whether you’re buying in Terravita Scottsdale or in another community, these rates usually just pertain to those with perfect or near-perfect credit. In order to get a good rate, you normally have to pay part of a point or more to get the advertised rate. Your lender, I’m sure, will try to find any reason to raise the rate. The lender might even go as far as running your credit again a few days before closing. If there has been any change in your debt-to-income ratio, you’ll lose the low mortgage rate.
Another mistake home buyers make in Terravita Scottsdale and elsewhere is not comparing lenders. A reputable broker will show you the rate certain banks and credit unions are quoting so you can pick the loan you like the best. But you can also shop around yourself by talking to local and national banks and a credit union.
A third way you could lose money is not paying attention to the terms of the mortgage. Even though you might qualify for the advertised rate, the true cost of the loan is the annual percentage rate (APR) which includes fees from the lender. In fact, there are many ways lenders can raise the fees including raising the processing fee.
Fourth, waiting for a better rate can also cost you in the end. Whether a home in Terravita or another valley neighborhood, you don’t want to lose your dream home over, say, a half of a point in interest. Keep in mind, no matter what the interest rate is, you’re going to pay thousands of dollars in interest in the beginning before putting a dent in equity.
Finally, choosing the wrong type of loan can cost you, as well. Even in Terravita, the type of loan that a buyer chooses should depend on current market conditions and how long you plan to stay in your home.