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Home Loan – Sun American Mortgage | Arizona, Utah, California

These Are Six Secrets About Mortgage Companies In Utah That You Wish You Knew.

Most people make the most significant financial commitment of their lives when they get a mortgage.  Mortgages come with the risk of fraud, given the amount of money involved.  Even a slight increase in interest rates or extra closing costs can add up to thousands of dollars throughout a mortgage.  You could even lose more money if you pay fees you shouldn’t and don’t understand.  Mortgages are a matter of protecting the interest of the borrower.  Be sure that you understand the terms of your mortgage loan by carefully reviewing the loan documents.

Additionally, knowing what to watch for is helpful.  Some homebuyers don’t even realize that they are at risk because the mortgage process is complex and overwhelming.  You are likely to be ripped off on your mortgage in one of several ways outlined below.  You must examine this information to avoid costly errors and ensure that you get the best mortgage terms.       

Introducing the Bait and Switch (your mortgage interest rate rises between when you apply for the mortgage and closing)

To receive the loan at the end of the mortgage process for the same interest rate the lender committed to providing you at the beginning of the process. A bait and switch are one of the most common methods taken advantage of by mortgage companies in Utah. Borrowers have the experience of getting charged more than twice their initial interest rate at the closing of their mortgages. A higher interest rate is typically disclosed to borrowers within a week of the loan closing date when they still need the proceeds from the loan to close on their home purchase. Rather than repeating the mortgage process and possibly losing the house they want, borrowers usually accept a higher interest rate.

Paying a higher interest rate with a “no-cost” mortgage

To attract potential borrowers, lenders often offer “no-cost” mortgages. While it may seem appealing to borrowers who want to save money on a mortgage to avoid paying closing costs, some no-cost mortgages end up costing the borrower more over time.  If you are considering a no-cost mortgage, be sure to inquire up-front about what fees you might be required to pay. Be sure you don’t pay any Utah mortgage lenders or third-party fees for the appraisal, title, and escrow, as well as third-party fees such as the title company.

A “no-cost” mortgage is not accurate to describe as such. Often, when the lender offers a “no-cost” mortgage, the borrower will be expected to pay other closing costs such as appraisal fees, title insurance, escrow fees, and attorney’s fees (if any). The borrower may also have to pay upfront costs, such as an appraisal fee, for no-cost mortgages, which later will be credited back when the mortgage closes. After the mortgage closes, the borrower can recoup the up-front costs, which is why such a mortgage carries “no cost.”.

The lender charges you upfront fees before you are pre-qualified or pre-approved

In the mortgage industry, lenders are only allowed to charge applicants an application fee before submitting a loan application ($10 – $30). You can incur additional processing fees after the lender has received your loan application.

You may be charged fees if the lender accepts your application, even if you do not qualify. Unsuspecting borrowers suffer in this way. You may not only lose hundreds of dollars in unnecessary fees, but you may also have your mortgage application declined.

Always ask to be pre-approved before you submit your application so that you can avoid any unfortunate outcomes. Also, always pay any fee collected by the mortgage lender Utah or the appraiser. In most cases, you should be able to find out if you’re eligible before submitting your loan application. Saving money, time, and unnecessary hassles can happen with this approach.

Closing costs that are too high

Borrowers should also pay attention to closing costs when purchasing a home. Borrowers focus on finding the cheapest interest rate for their mortgage lenders in Scottsdale but spend more than they should because they ignore closing costs. It is challenging to predict closing costs. Lenders, mortgage programs, and loan sizes affect closing costs. Moreover, closing costs come in different forms. Depending on the lender, appraisals, title companies, escrows, and defense attorneys (if applicable) may be non-recurring closing costs that borrowers pay upfront to various third parties involved in completing and closing their mortgage. Closing costs that borrowers will continue to pay after the mortgage closes are known as recurring closing costs. Ongoing costs are often paid in part by the borrower depending on the date the loan closes and which day of the month it closes on. There are several examples of standard costs, including interest expense (between the day your mortgage closes and the end of the month in which your mortgage closes), homeowners insurance, and prorated property taxes.

Paying higher interest instead of separately paying Private Mortgage Insurance (PMI)

Imagine that you put down less than 20% of the home’s price during the home buying process. If this occurs, lenders usually require the borrower to purchase private mortgage insurance (PMI). They protect the lender against default risks due to the borrower defaulting for their home loans in Utah. Sometimes, lenders charge borrowers a higher interest rate than they would charge them separately for PMI. A higher interest rate can result in significant savings over the life of the mortgage compared to paying for PMI separately.

Mortgages have a prepayment penalty.

When paying off the loan early, some mortgages require a penalty for the borrower. For example, when borrowers pay off their mortgage in full within the first five or ten years of a 30-year fixed-rate mortgage, they will typically pay a prepayment penalty. Ask your lender to show you your Loan Estimate, which outlines essential mortgage information and indicates if your mortgage has a prepayment penalty, as well as talking with them about your pre-payment penalty. We recommend that borrowers select mortgages that do not have a prepayment penalty as this is a potentially unnecessary cost to the borrower in the future.

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