Isi Wu, The Realtor for You

 

Buying a home is the largest purchase many people ever make.  So it’s important to find a mortgage that’s the right fit. If you’re a new homebuyer, or if you’re considering refinancing your current mortgage, test your expertise with this simple quiz:

TRUE or FALSE 

1)               Borrowers who choose an adjustable rate mortgage (ARM) need to be confident they can continue monthly payments even if they payments increase significantly. T/F 

2)               People who choose a fixed-rate mortgage are typically those who prefer steady and predictable payments over the term of the mortgage. T/F 

3)               Balloon payment loans make sense only if you’re sure you will move or refinance, or can otherwise pay off the balance before the balloon payment comes due. T/F 

4)               When you choose and ARM and interest rates drop, your payments may also become lower without refinancing. T/F

5)              Prepayment fees can help lower your interest rate, but they will cost you more money if you need to refinance during the time they apply. T/F 

Check your answers at the bottom and be sure to fold these tips into your mortgage hunting.      

• Talk to multiple lenders and compare various mortgage types.
•  Know your credit score and get prequalified.
•  Take time to learn important terms and ask questions.
•  Thoroughly investigate the terms of each mortgage type.
•  Learn what the additional costs are.
•  Find out what all your settlement costs are.
•  If you choose an ARM, make sure you know when and by how much the loan may change. 

You don’t really have to become a mortgage expert, but you DO need to understand and compare the various loan options out there. One source of plain-language, impartial information is “The Simple Facts” at www.simplefacts.com , created by the Mortgage Bankers Association.  It includes descriptions of many types of mortgages, plus a simple calculator that lets you see estimates of what you’ll pay in all kinds of different scenarios. 

 For more information, visit www.HomeLoanLearningCenter.com. 

KEY to QUIZ

1-T, 2-T, 3-T, 4-T, 5-T