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Applying for a mortgage loan
Industry Tips
A mortgage will likely be the largest loan of your lifetime. For most, it can be an unfamiliar process where you must trust the company that you are dealing with to be honest and ethical.

Although the majority of mortgage lenders are trustworthy, the best way to gain piece of mind during this process is to be prepared and ask questions.

First of all, know how much house you can afford. This doesn't mean how much a lender tells you that you can afford. Analyze your budget to find out what you are comfortable paying each month.

Take a look at your credit report. The BBB encourages consumers to frequently review their credit report. This gives you the opportunity to verify the accuracy of what is being reported and clean up any errors prior to beginning the mortgage process. This can save you valuable time. You can obtain a free annual credit report at

Know how much of a down payment you have. The amount put down on a mortgage loan can greatly affect the amount of money you spend over the lifetime of the loan. Explore all your options including borrowing from your 401k or retirement account.

When you are ready to shop around for a mortgage, keep in mind that you are the customer and have the right to talk to multiple lenders in order to find one that best suits your needs. Be cautious of high-pressure sales tactics. Familiarize yourself with the different types of lenders such as mortgage bankers, mortgage brokers, savings & loans, etc. Know the advantages of each type and which you feel would be most suitable.

Be sure to keep in mind while shopping for a mortgage not to give multiple lenders permission to pull your credit report. Multiple hits on your credit report can adversely affect your credit rating.

Ask prospective lenders to explain the different types of loans available and carefully analyze the difference between each. Ask about the total cost of the loan including interest rates, points or other fees.

Ask for a Good Faith Estimate of all loan and settlement charges before you agree to the loan and pay any fees. Make sure to find out what fees are refundable should you decide to cancel the loan agreement.

Don't forget to figure in your property taxes. If you are purchasing a brand new home where taxes have not yet been assessed, they can be higher than anticipated. Also keep in mind that during the second year of your mortgage, you will owe taxes for both the first and second year. Be sure to budget accordingly.

Don't be afraid to ask about any charges you don't understand. Also, don't feel pressured into signing any documents until you are completely clear as to what you are signing. You have every right to read each document before you sign it, regardless of how long it takes.


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