Mortgage Seminar chapter 8 at Bankrate.com's Elearning Workshop

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Portland, Oregon	September 6, 2008

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CHAPTER VIII -- HOMEWORK TIME

LESSON 17: 10 QUESTIONS TO ASK AT APPLICATION TIME

In the first few chapters, we talked about how mortgages work and suggested what kind of loans make the most sense for certain kinds of borrowers. We've also discussed what to expect when you apply for a loan and how lenders will qualify you. Now, let's review some of the questions you should ask when you're shopping for a mortgage. If you've already chosen a lender and are ready to apply, make sure you have the answers to these questions first! See Tip 1

Click here to get a printable version of the lender interview. If you don't have Adobe Acrobat Reader, it takes just a few minutes to download this free program. Click on the icon to get Adobe Acrobat Reader.

1. What is the interest rate on this mortgage?
To know exactly what you'll be paying in interest over the life of the loan, you need to know the rate. This is the single most important figure to obtain.

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Some people believe the advertised interest rate is always the interest rate they will get. Rates change quickly, and if your credit isn't perfect, you won't get the lender's lowest rate. In addition, "Be careful of a 'bait and switch.' A company advertises one APR, but when you go in to apply, it's higher, or they talk you into another program completely."
Ann G. Riley, Gilpin Mortgage, Wilmington, Del.

2. How many discount and/or origination points will I have to pay to get this rate and loan?
As we discussed earlier, lenders can charge points that lower your interest rate and points that provide no benefit whatsoever to you. Find out how many you'll be expected to pay for the loan and which kind of points they'll be.

3. What closing costs will be charged on this loan and will you provide the "good faith estimate" of those costs up front?
Mortgages come with fees for various services that lenders and other parties involved in the transaction provide. We'll talk more about these services and how much they cost in Lesson 20. But you need to find out what you'll be charged as early as possible. Many experts say that you shouldn't use a lender or broker unless that person will provide a good faith estimate up front. We'll talk more about this form shortly. See Tip 2

4. When can I lock in the interest rate and what will it cost me to do so?
The interest rate of the mortgage you're applying for may go up or down between the time you apply and the time you close. That's why you may want to lock in the rate for a specified period of time, rather than let the rate float until the closing. Be sure to ask the lender if there is any fee for locking in the rate and whether you can also lock in points. See Tip 3

(continued on next page)

TABLE OF CONTENTS

CHAPTER I
Lesson 1
Quiz

CHAPTER II
Lesson 2
Quiz

CHAPTER III
  Lesson 3
  Lesson 4
  Lesson 5
  Quiz

CHAPTER IV
  Lesson 6
  Lesson 7
  Quiz

CHAPTER V
  Lesson 8
  Lesson 9
  Quiz

CHAPTER VI
  Lesson 10
  Lesson 11
  Quiz

CHAPTER VII
  Lesson 12
  Lesson 13
  Lesson 14
  Quiz

CHAPTER VIII
  Lesson 15
  Lesson 16
  Lesson 17
  Lesson 18
  Quiz

CHAPTER IX
Lesson 19
Quiz

CHAPTER X
Lesson 20
Quiz

CHAPTER XI
Lesson 21
Quiz

CHAPTER XII
  Lesson 22
  Lesson 23
  Lesson 24
  Quiz

CHAPTER XIII
  Lesson 25
  Lesson 26
  Lesson 27
  Quiz

CHAPTER XIV
  Lesson 28
  Lesson 29
  Lesson 30
  Quiz

Definitions

Lock-and-float programs give home buyers peace of mind

A good time to lock your rate

Bargains still plentiful in online-lending land

With good credit, zero-down can put you in a house, but know the risks

Should I save cash or pay off debt before I buy a home?

The lowdown on mortgages that require little cash up front

Protecting yourself against mortgage scams and screw-ups

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