Shopping For a Mortgage? Do Your Homework, Ask Questions and Compare Lenders
Friday, January 25, 2013
Posted by: Susan Dyer
Spring marks resurgence in the local real estate market, as more homes are available for sale during spring and early summer than at any other time of year. But many homebuyers face challenges when securing a mortgage, according to the Kansas Credit Union Association.
With more restrictive lending qualifications, a broad selection of loan products, fluctuating interest rates, and various lenders to shop and compare, consumers quickly learn it takes work to find the right mortgage.
"Despite the belief that loans today are more difficult to obtain, there are institutions willing and able to lend to consumers,” said Marla Marsh, President/CEO of the KCUA, the state organization representing 101 credit unions across Kansas. "Home buyers just need to know where to look and what questions to ask.”
KCUA suggests the following tips for consumers shopping for a real estate loan:
Determine how much house you can afford.
Set realistic goals by reviewing your budget and checking your credit report for accuracy. Those having less debt and stronger credit scores will qualify for higher loan amounts and lower interest rates. Also, factor in costs beyond your monthly mortgage payment -- taxes, insurance, utilities and maintenance expenses can add hundreds to your monthly budget.
Shop and compare your options.
Credit unions, banks, thrifts and mortgage brokers can be good sources for securing your mortgage -- check with several of them. Ask for information on the same loan amount, term and type to ensure a fair comparison.
Rates change frequently in today’s environment, so check back with potential lenders often, contacting each of them the same day if possible.
Educate yourself on pricing and fees, risks and benefits.
Ask questions about rates and fees -- they will differ among lenders and can dramatically impact the final cost of your mortgage. Some loans offer more flexible terms but charge higher settlement fees or penalties for early pay-offs.
A variety of different loan types exist, such as fixed-rate, adjustable-rate, and jumbos; and each comes with different risks and benefits. Understand the options available and which one best suits your needs.
Last year, consumers turned to Kansas credit unions for $377 million in new first mortgage loans, and currently, these credit unions provide nearly $625 million of the state’s outstanding home mortgages.