Top 5 Things to Look out for in a Mortgage Taking out a mortgage can mean agree…

Top 5 Things to Look out for in a Mortgage Taking out a mortgage can mean agreeing to a commitment that lasts up to 30 years, so it’s important to read the fine print. To help you find the best mortgage lender for you, here are the top 5 things you will want to be on the lookout for in a mortgage. Prepayment Penalties Did you know that under some agreements you can actually be penalized for paying off your mortgage early? Since many individuals will try to pay off their mortgage as soon as they can (and with good reason) prepayment penalties can end up being a real problem. Be sure to check beforehand if your mortgage includes any prepayment penalties. Cash Due at Closing Avoid any surprises when it comes time finalize the purchase of your new home by understanding exactly how much money you are expected to pay on closing day. Cash due at closing includes both a down payment plus any settlement costs, so be sure that you don’t miss anything. Settlement Costs Speaking of settlement costs, these extra charges are certainly something to watch out for. Thanks to settlement costs, the mortgage with the lowest interest rate isn’t always the one that makes the most financial sense. These charges act as a way for lenders to advertise a low-interest rate while still making plenty of money on the backend through other costs. To make sure you completely understand what settlement costs you are going to incur, ask your lender to fully explain each item listed on the Good Faith Estimate of Settlement Costs.  Poor Credit There are lenders who will lend you money with poor credit, but they are going to make you pay for it. If your credit is suffering, you will be well-served to try and raise it before you apply for a mortgage. Be sure to check your credit going in so that there are not any surprises, and, if your credit is lower than it should be, take a little time to get it into better shape before you apply for a mortgage. Balloon Payments Without understanding if your mortgage comes with any balloon payments, you may be left thinking you have paid it off only to discover you still have to pay a large, lump sum to your lender at the end on the loan. In balloon loans – which is sometimes how mortgages are structured – only a portion of the loan’s balance is paid out over time, with the rest of the loan’s balance coming due in a single, final payment. Though not inherently a bad idea (it depends on the situation) agreeing to a mortgage that includes a balloon payment can be a shock if you don’t know what it is you are agreeing to. Conclusion Applying for a mortgage is a big step, and if you’ve made it there, congratulations! You’re that much closer to owning a new home. Nevertheless, it’s still important to be careful and ensure you fully understand everything you are agreeing to. By choosing a reputable, reliable lender and taking the time to fully analyze your mortgage, you’ll be able to avoid any unwanted surprises and end up with the mortgage that works best for you. www.blueskyforyou…

Source by jeanie0104