Get More Loan Info

Prior to you applying for a loan and paying a fee, you should ask the lender for all the information he has on the loan you are considering. It is absolutely essential that you understand index rates, margins, caps, and other ARM features like negative amortization. You should get lots of useful information from disclosures and advertisements that are subject to certain federal regulations.

Advertising

Most of the information that you know about mortgages most likely comes from newspaper advertisements that are placed by real estate brokers, lenders and builders. On one hand this information is helpful and useful but on the other hand, you should be aware of the fact that advertisements are designed to grab your attention and make getting a mortgage seem as easy as possible. The advertisements you usually see talk about low interest rates and low monthly payments however they conveniently do not talk about the fact that those interest rates could increase significantly. Therefore is it very important to look carefully at advertisements and ask questions, don't take everything at face value as you might be in for a big surprise.

A federal Truth in Lending Act requires mortgage advertisers, to give further information on the loan once they begin advertising specific terms. For instance, if advertisers want to show the interest rate on the loan, they must also include the annual percentage rate (APR) and whether or not that rate may go up. The annual percentage rate is the cost of your credit as a yearly rate and it reflects more than just a low initial rate because it takes into account interest, points paid on the loan, any loan origination fee, and any mortgage insurance premiums you may have to pay. This is included in the advertisements so that anyone reading the advertisement is not deceived into thinking the low interest rate remains and so that the advertisement doesn't misinform people about the details of the mortgage.

Ads may play up low initial rates. You should get all the facts.

Disclosures From Lenders

Federal law requires the lender to give you information about adjustable- rate mortgages (APR), in most cases before you apply for a loan. The lender should also give you a written summary of the most important terms and costs of the loan. Some of these costs include the finance charge, the annual percentage rate, monthly payments and the payment terms.

Read information from lenders and ask questions before committing yourself.