Whether purchasing or refinancing a mortgage, following a few simple steps will ensure that borrowers get the best mortgage for their situation.
The first questions that borrowers should ask themselves are how long they plan to own the property and what type of stability in payments are they looking for. If you plan on being in the property for only a few years, an adjustable-rate mortgage (ARM) or a balloon loan might be best for you, as the rates on these can be lower than that of a fixed-rate mortgage.
Finding the Best Mortgage
Getting in touch with one or more mortgage professionals is the next step in the process. You should explain your situation, then listen to what the professional has to say. Mortgage brokers and banks are required by law to provide, in writing, to a potential borrower a good faith estimate, or GFE. The GFE will show a rate, costs and the amount of escrows that a borrower should expect to pay.
Good faith estimates can and should be compared to one another. If you want another opinion, you should speak to someone you trust and who is independent of the transaction, such as a real estate attorney.
You should also be asking how long you can expect the process to take. Longer turn times in periods of very low rates are to be expected. A good idea, especially in the case of a refinance, is to get prequalified in anticipation of low rates. The less processing that a lender needs to do with a file after the rate is locked, the lower the rate it is usually able to offer.