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5 Things You'll Never Hear Your Lender Say

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What You'll Never Hear Your Lender Say

In today's market, mortgage lenders will say all kinds of things to get qualified borrowers to do business with them.  But no matter how many different lenders you talk to, you'll never hear them say these five things:

 

1.  "We love fees!"

Some of the fees you have to pay are understandable -- like a mortgage application fee or the fee for the appraisal on the house you want to buy.  Other fees, however, seem to defy reason.  And with banks struggling, some will try to shove as many fees into the fine print as possible.  That's why you have to read everything so carefully! 

Luckily, the Real Estate Settlement Procedures Act (or, "RESPA") requires lenders to give you a good faith estimate of all your expenses when you turn in your mortgage application.  It will be up to you to read everything carefully (even the finest of fine print!), so that you know exactly what kind of fees you're responsible for when it comes time to close on your mortgage.

 

2.  "It's not easy to get rid of private mortgage insurance."

If you can't afford a down payment of at least 20%, your lender will require you to pay private mortgage insurance every month.  Your specific price will depend on the value of your home, but count on spending close to $100 per month.

Oftentimes, your lender will tell you that you can stop paying for private mortgage insurance once you've paid off 20% of the loan (or, in other words, once your home equity has reached 20%).  However, this can be a lot easier said than done!

When it comes time to actually cancel the private mortgage insurance policy, some lenders will drag their feet.  And, unfortunately, you're at their mercy.  Ultimately, your lender has the final say on whether or not you still have to pay private mortgage insurance.  You can't just cancel it or ignore the bills.

 

3.  "Getting pre-approved doesn't mean you're out of the woods."

The commercials make it sound so easy -- just get pre-approved and then go out and buy the house of your dreams!  Unfortunately, it's not always that easy.

Let's say you're pre-qualified for a $200,000 mortgage.  If you go out and find a $200,000 house, your lender has to agree that it's actually worth $200,000.  If they do an appraisal that says the house is only worth $150,000, that's all they'll give you to buy it -- meaning you'll either have to find another house, or come up with an extra $50,000 all by yourself.

Bottom line -- don't make any big plans until you get the final word from your lender.

 

4.  "Keep looking around."

These days, mortgage rates are so low and so few people are actually buying houses that lenders are chomping at the bit to get quality customers through the door.  They'll do whatever they can to set you up with one of their loans -- so it's up to you to make sure you can't get a better deal somewhere else.

 

5.  "Go ahead and counteroffer."

Lots of homeowners-to-be don't know that they have the power to negotiate with their lender.  Many of them think they simply have to accept what's offered.

However, negotiations are common in the mortgage world.  After all, you have rates, points, the length of the loan, and fees to worry about!  There can be a lot of wiggle room if you take the time to negotiate.

Your lender isn't going to advertise that, though.  Instead, their job is to give you a deal that's most beneficial to them!


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