Tips on Finding a Mortgage

If you are having trouble making your mortgage payments, it’s important to contact your loan servicer right away. The longer you wait, the fewer options you will have. To find out what some of those options might be, the government offers free information about options and eligibility on the website maintained by the Department of the Treasury & Housing and Urban Development (HUD).

Your credit history is the single-most important factor in determining your ability to purchase a home. Get a copy of your credit report at least six months before you start shopping for your new home. That'll give you time to correct any errors and anything else that affects your credit score negatively.

Do you know the difference between a 3/1 variable rate and a seven-year balloon guaranteed rollover? If you're shopping for a mortgage, it'll pay to learn what kinds of mortgages are available (called mortgage products), and which best suits your current and projected financial situation. For instance, planning on moving in a few years? Get a variable rate mortgage and pay less each month than you would on a fixed rate mortgage.

Reports show that as many as 10% of all mortgages are miscalculated, meaning you have a 10% chance of paying more than you should for the money you borrow. Need a mortgage calculator? Here's one: bankrate.com/gookeyword/. Check your figures from your latest mortgage statement, figure the interest rate and the amount of the loan to make sure your numbers match up with those of the mortgage holder. This site will give you terrific information on buying and financing a new home: content.realestateabc.com.

The average American family moves every five years! You can get a much lower rate, seven-year mortgage with a balloon payment due at the end of the seven years. If you've already moved, who cares about that big balloon payment? If you're still in the house, you can refinance the outstanding debt on your home with a seven-year payment history to back you up.

Consider paying an extra principal payment on your 30-year loan each year. In the early years of a loan, the principal portion of your payment is very small. On a 30-year $100,000 loan at 7 1/2%, the monthly principal payment in the first several years is approximately $75 to $85/month.

Got good credit? Then lenders want to talk to you. People with high credit scores have more negotiating clout with lenders. If you have a good score and you can show a perfect payment history, you're the ideal candidate to negotiate a better rate or better terms at closing.

If you currently have a high-rate mortgage, consider refinancing. A $100,000 loan at 9 1/2% refinanced to 7 1/2% saves $142/month or $1,704/year, for a total of $50,991 over the life of a 30-year mortgage.

Don't shop for different kinds of credit within a short period of time (ex: don't shop for a car loan, mortgage loan and credit cards all in one 30-day period). High numbers of credit applications within a short period of time could negatively affect your credit score.

Don't rely on your mortgage lender to tell you everything. Your focus is on your new home and getting that mortgage, not on hidden fees and charges. Ask any potential lender for a complete list of closing costs, add up all of those fees and know what you're really paying for your loan. The Fannie Mae Foundation will provide unbiased information on lenders' tricks and traps. Visit their site at: homebuyingguide.com.