How Not To Get Screwed When Shopping For A Mortgage

Mortgage rates are the lowest they’ve been since May 2013, according to Freddie Mac . The good news is that buyers can now get a 30-year fixed rate mortgage for as little as 3.69%. The bad news is that eager homeowners are wading into a thick sludge of documents, come-ons and deception.

The two most popular styles of mortgages are fixed and adjustable interest. A fixed interest loan remains the same over the (usually) 30-year term. An adjustable interest loan fluctuates annually based on certain indices. So, if the rate on the one-year Treasury Constant Maturity jumps, your interest rate will too. Not surprisingly, in this environment of record low rates, adjustable loans are not very popular. There are also “hybrid” loans which feature a fixed rate for a certain period of time (usually 3-10 years), and an adjustable rate thereafter.

 True, most of the more questionable loans, like stated income, interest-only and negative amortization have faded from the scene in the wake of the 2008 financial crisis. Typically unconventional or “hard money” lenders (private individuals lending on the asset rather than the borrower’s ability to repay) will offer these. Consumer finance protection regulations have nearly forced banks and conventional lenders out of this space, but there are still plenty of traps set for unsuspecting mortgage shoppers, especially those in hot pursuit of a bargain.

Whether you’re looking for a $300,000 mortgage or a $3 million mortgage, here’s how to make sure that when shopping for a loan, you don’t overspend.

Cheaper Isn’t Necessarily Better

Mortgages can be risky and secured by the thing that matters most– your home. Rather than search for the cheapest option, focus on reliability. Ads touting low rates from anonymous companies are often bait and switch scams. Reviews are

read more: http://www.forbes.com/sites/vanessagrout/2015/02/19/how-not-to-get-screwed-when-shopping-for-a-mortgage/