Loans (Photo credit: jferzoco)Financial IQ Philippines Quick Hit(s):Have you tried securing mortgage? If you have, what did you select - adjustable rate or fixed rate? Adjustable rate typically offers smaller interest up front, hence, lower monthly amortization. The danger is, interest rates are adjusted periodically based on the terms you selected... and it could go up or down depending on the interest rate of the market at that point in time.
Whereas fixed rate, you will typically pay a bigger monthly amortization up front. However, you are guaranteed that the monthly amortization will remain the same for the duration of the loan.
Which do you prefer?
Purchasing a home is a demanding and overwhelming experience. Add to it the stress of vetting a mortgage broker, and the home buying process becomes even more challenging. Though most mortgage brokers genuinely aim to please, some care more about the amount of their commission than the amount of money they can save their clients.
1. Do you have any references?
Request the names and phone numbers of at least three recent customers. Call them and ask them how they were treated. Would they take advantage of the broker’s services again? Was the broker trustworthy with fees and good faith estimates of closing costs?
2. How do you lock in interest rates?
Unscrupulous brokers may mislead you, and promise to lock in a rate on a specified date, even though they plan to wait for a rate drop first. Once the rate drops, the brokers lock in at this lower rate, charge you for the higher rate, and collect the difference. To protect yourself, request a loan commitment from the lender that details the date the broker locked in the rate and when it expires.
3. Which loan is right for me?
Ask the brokers what loan they recommend based on your credit status and financial situation. Are they working within your means, or simply offering you run-of-the-mill loans you can acquire anywhere? Beware of brokers who push loans on you without gathering any of your personal details. A good broker will obtain the necessary information to provide you with a mortgage that meets your needs.
4. What costs am I responsible for?
Ask about closing costs, points, and origination fees. Lenders may charge points -- one point equates to 1 percent of the loan amount -- to offer you a lower interest rate, but brokers may charge points as a fee for their services. Request an estimate of closing costs before you apply for a mortgage. You’re eligible to receive a Good Faith Estimate (GFE) of closing costs three days after you apply.
5. What is the actual interest rate?
Request the annual percentage rate (APR) to compare loans. The APR is higher than the quoted interest rate because it includes all the lender’s fees, such as closing costs, the margin, and points.
6. Will I be responsible for a fee if I pay off my mortgage early?
If you’re planning to sell or refinance your home in the future, ask your broker if you’ll be charged a fee. Inquire about penalty periods and how lenders assess pre-payment fees.
http://www.bankoftheinternet.com/home-mortgage/mortgage-brokers/6-questions-to-ask-a-mortgage-broker
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