2009.10.03 19:46:06

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Ask your Colorado mortgage professional these questions to be sure you choose the mortgage that will best meet your needs

• What is the interest rate?
This is the most obvious question. The interest rate is used to calculate your monthly mortgage payment, and it will determine how much you’ll pay over the life of the loan. However, you will need to understand more than simply the quoted rate. A good benchmark for comparing offers is their annual percentage rate (APR). This figure combines the interest costs and other fees charged by a lender over the life of the loan.
• Will the interest rate change over the life of the loan?
In the case of a fixed rate mortgage, the interest rate will remain the same for the entire term of the loan. Adjustable rate mortgages, however, have interest rates that change periodically. If you’re considering an adjustable rate mortgage, make sure you understand what the adjustment is – that is, how often the rate will change (usually annually). Also, ask what the index and margin will be as that will determine your rate, and find out what caps will protect you from large rate increases. You should request a chart showing the past performance of the index the rate is based on as well.
• Will I be charged points?
A lender may offer to lower your rate if you pay discount points up front. One point is equal to one percent of the principal – two points on a $150,000 mortgage, for example, equals $3,000, and may lower your rate by 0.5 percent. Lenders may also charge origination points, which are administrative fees and do not affect the interest rate.
• What are the closing costs and other fee?
Ask each lender for a Good Faith Estimate (GFE) of the closing costs. (Lenders are required by law to provide a GFE within three days of your application). Take the time to go through each estimate carefully to be sure you understand what each item means. This is important when comparing offer as lenders sometimes use different terminology for the same item.
• Will you lock-in the interest rate?
A lender may allow you to lock-in the interest rate and points quoted in your offer for a specific period of time, often 30 to 60 days. This will protect you if rates go up during the time it takes to process your application. As what date the lock-in becomes effective and whether there is an additional fee involved – and get the agreement in writing.
• How will my down payment affect the cost of the loan?
Some lenders require only a very small down payments of 3.5 or 5 percent, and some even offer zero-down-payment loans. But these carry significant costs to offset their inherent risk. Typically, if your down payment is less than 20 percent, the lender will require you to pay for private mortgage insurance (PMI). On the other hand, you may be able to reduce the cost of your loan, or at least improve the terms, by making a large down payment.
• What documentation do you require?
Lenders will ask you to provide a bundle of personal information, such as your income, employer, social security number, information about your assets and an appraisal of your home. Ask for a checklist so your application is not delayed by missing paperwork.
• 8. How long will it take to close the loan?
Processing a mortgage application can be time consuming. Ask each lender how long they expect it will take to review your documents. A minimum of two weeks is typical, though it is not unusual for it to take several weeks.

First Choice Mortgage Company’s is committed to be information and education resource for the Colorado mortgage consumer and a full range of mortgage tools can be found on our website www.FirstChoiceMortgageCoLLC.com. We pride ourselves on being a full-service mortgage company where you get the advantage of experienced mortgage professionals, great rates and a very wide range of mortgage products. First Choice Mortgage Company has build its reputation on providing outstanding service to its clients and the launch of www.FirstChoiceMortgageCoLLC.Com is yet another example of the company’s dedication to exceeding expectations.