We all need to borrow money in order to purchase our homes, hardly anybody pays cash for such a large purchase, which means we need a mortgage. But there are several questions you should ask before you sign that mortgage and that’s exactly what I want talk about in this article today.
First be sure to ask about points. Points are a percentage of the amount of the loan that are paid to the lender at the beginning of the loan. The bank is not required to charge points, they do so because they can get away with it if you let them. Many times you can negotiate them away by threatening to go to another bank who may be charging fewer points.
The next question to ask is about prepayment penalties. Most of the time this won’t be much of a big deal because most loans give you the right to pay off your loan in full without any penalties. But make sure and ask because sometimes a bank may try and slip this one in because they know that people like to refinance their loans and this is a way for the bank to profit when you do that.
Next look at any do on sale clauses. These clauses usually mimic the prepayment clauses in that they attach conditions or payments that are due when you sell your house or refinance your loan, so be sure to ask about any clauses like that in your mortgage.
Finally look at any escrow payment clauses. Sometimes escrow payments require a portion of property taxes to be paid before hand or certain homeowners insurance policies to be paid before hand and you’ll need to know specifically what your escrow payment clauses are before you sign the mortgage.
The best thing to do when signing a mortgage is to have an attorney check it over to make sure everything is on the up and up. It’s best to use a lawyer that has experience with real estate law because not all lawyers are created equal and like anything else in life they specialize in certain areas. It’s usually not good enough just to give your mortgage to your regular attorney, instead insist on somebody who has experience with real estate because they can do a better job and they’ll do a quicker job which means you’ll pay less since lawyers charge by the hour.
Buying a house is a big responsibility and borrowing money can be intimidating to many people but it doesn’t have to be if you follow the simple tips that I outlined in this article today, then you shouldn’t have any trouble in the long run. Remember, when in doubt, ask questions!