Whether you are buying a house or refinancing, there are a few things you will want to know:
1. What is the APR?
APRs (annual percentage rate) can vary from lender to lender. Check with multiple lenders and narrow your choices down to ones that offer the best rates for your situation.
2. How much equity do you have to have to not pay PMI (aka: mortgage insurance)?
The standard is 20%.
That means that unless you have paid 20% of the home’s value you will be paying an additional monthly fee called PMI. There are programs that allow lower down payments, but that does not mean the PMI will be waived.
Find out what your lender’s policies are. Some lenders will use comps to remove the PMI, others require an appraisal. This is especially good to know if you are currently paying PMI and property values in the area have increased.
3. Will the loan stay local?
There are lenders that provide and service mortgage loans and there are lenders that will make the loan, then bundle it together with a bunch of other loans and sell the bundle to another company (“Company B”) for servicing. Company B can then bundle and sell to Company C.
The more transfers the higher the likelihood of something getting lost or errors being made. You may decide to go with the second approach, but at least do so knowingly.
The amazing Miriam Perez Gilmore was live in our free How To Be A Money Master facebook community back in February to take a deep dive into the world of mortgages. I highly recommend you follow her for even more information or you can join the group to watch our discussion. Three simple questions and you can have even more access to world of financial literacy.
https://www.facebook.com/groups/howtobeamoneymaster