Article Advise

submitted: Aug 26th 2008 | by: SergHarros | Total views: 1 | Word Count: 451 | |

Getting the best mortgage for a home purchase is often a subjective thing. The best option depends on your situation, but apply the following tips and you should end up with a good deal.

1. The time to address your credit report is when you first start thinking about buying a home. Don't wait until the process is underway. If you need to fix something on your report, it can take a couple of months.

2. In the old days, it took weeks to get approved for a mortgage. Many lenders now use a software program to determine if they will give you a loan. If your credit is in good shape, it can take as little as three days for approval.

3. Some adjustable rate mortgages tie their interest rates to the COFI index. COFI stands for 11th District Cost of Funds Index. It is a monetary correlation of money transactions for banks in California, Arizona and Nevada.

4. To make sure the rates don't change after a lender approves your mortgage, you can lock in the loan by paying a fee. This does not lock you into the loan, only the lender. If you subsequently find a better deal with another lender, take it!

5. If you pay points on your mortgage, try not to wrap it into the mortgage. If you write a separate check from your personal account, you can deduct the full points on your taxes.

6. If you pay points for a loan on a second home, you cannot deduct them from your taxes all at once. You must deduct them over the life of the loan.

7. Deducting the interest on a mortgage is a great tax benefit. Most people do not understand there is a limit to the deduction. You can only deduct the interest on the first million dollars of a mortgage.

8. Lenders make money on adjustable mortgages via the margin. The margin is the difference between the interest rate they are charging you and the index the loan is based upon. The margin is usually 2 to 5 percent.

9. When applying for a mortgage, you will be surprised at how many fees lenders hit you with. To check your credit, you will often be charged a credit report fee. It should be no more than $50.

10. ARM loans are tied to something called indexes. These indexes are gauges for the cost of borrowing money. There are five different indexes. The LIBOR rate - London Interbank Offered Rate - is a popular one.

Applying for a mortgage can be a bit intimidating. You financial soul is stripped bare. That being said, don't get to stressed. Millions of borrowers are approved and you probably are more qualified than many of them.

About the Author

Learn more about California bad credit mortgage loan options at GWHomeLoans.com.

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