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Cheap Mortgage Rate
Must-Ask Questions When you​ Get Your Mortgage
Whether you're buying a​ house or​ refinancing,​ there is​ more to​ a​ mortgage than the​ rate .​
Here are eight questions to​ ask while mortgage shopping .​
You'll have to​ ask yourself some of​ these questions; others can only be answered by mortgage professionals and insurers.
How long do I​ plan to​ stay in​ the​ house?
That's often a​ hard question to​ answer .​
Try anyway because a​ lot of​ your decisions depend on​ the​ answer.
The answer affects whether you​ would be better off paying points to​ lower your rate,​ whether you​ should get a​ fixed-rate or​ adjustable-rate loan,​ whether you​ should accept a​ prepayment penalty .​
If you're thinking of​ refinancing,​ the​ answer helps you​ decide whether you​ should refinance at​ all.
If you​ have no idea how long you'll live in​ the​ house,​ keep in​ mind that homeowners stay in​ one residence for a​ median duration of​ 8.2 years,​ according to​ census data .​
In other words,​ half of​ homeowners move within 8.2 years .​
The other half,​ naturally,​ stay in​ their homes longer .​
Do you​ feel average? If so,​ maybe it​ means you'll stay home for about eight years or​ so .​
(FYI,​ with renters,​ the​ median stay in​ one residence is​ 2.1 years.)
How much are the​ costs of​ getting the​ loan?
When you​ apply for a​ loan,​ you'll get a​ federally mandated document called the​ 'Good Faith Estimate' of​ closing costs .​
It estimates how much the​ lender will charge you​ for origination and discount fees,​ an​ appraisal,​ a​ credit report,​ document preparation,​ title insurance,​ a​ pest inspection and a​ myriad of​ other costs .​
Compare good faith estimates and especially take note of​ the​ line that reads Estimated cash at​ closing .​
That's an​ educated guess of​ how much you'll have to​ pay out of​ your checkbook to​ get the​ loan.
How long will it​ take to​ break even?
If you're buying a​ home,​ how long will it​ take to​ break even if​ you​ pay discount points to​ get a​ lower rate? If you're refinancing,​ how long will it​ take to​ recoup the​ closing costs from your monthly savings?
In either case,​ all you​ have to​ do is​ divide the​ upfront cost (of discount points if​ you're buying a​ house and of​ all the​ closing costs if​ you're refinancing) by the​ monthly savings you​ would get .​
That tells you​ how many months it​ will take to​ break even .​
If it's going to​ take five years to​ break even but you​ expect to​ stay in​ the​ house four more years,​ it's probably not worth it.
What makes me feel comfortable?
Bitton says some of​ her clients insist on​ paying zero discount points,​ while others want to​ pay a​ lot of​ points to​ get absolutely the​ lowest interest rate,​ even if​ it​ takes four or​ five years to​ break even.
As far as​ Bitton is​ concerned,​ there often is​ no right or​ wrong answer when people ask whether they should pay discount points or​ choose a​ 15-year or​ 30-year mortgage .​
There's not just an​ objective,​ dollars-and-cents number,​ Bitton says .​
There's also the​ psychological factor: What are you​ going to​ feel comfortable with?
She has clients in​ their 70s and 80s who get 30-year mortgages because that's what makes them feel comfortable .​
Some homeowners would rather refinance once and never have to​ bother with refinancing again,​ so they pay a​ lot of​ points for a​ rock-bottom rate .​
As a​ bonus,​ they have something to​ boast about at​ cocktail parties .​
Other clients simply want the​ lowest possible payments,​ so they snag an​ interest-only,​ five-year ARM .​
All understand what they're getting into and have found their comfort zones.




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