Expert Advice When Shopping for a Home Loan Mortgage

Consumers who have been turned down for home loans may not realize that they have many choices for obtaining home financing.

There are many financing options available for people who are self-employed, have income that varies from month to month, have trouble documenting income or have experienced credit problems. As with any significant financial investment, consumers should carefully explore both the lenders and the loans they are considering. Knowing the basics can empower consumers to make the right choices among lenders and loans.

• Know that you have options. If you've been turned down for a loan, it's easy to feel that you have no choices and must take the first loan offered. There are many lenders offering home loans to people who don't qualify for conventional loans. Never let yourself be pressured into a loan that you're not comfortable with. Take your time, explore your options and be sure that the loan and the lender are right for you.

• Know your lender. Most consumers feel more comfortable with an established lender that has a proven track record. Find out whether the lenders you are considering are national and have strong mortgage experience and expertise. Check with the Better Business Bureau in the city in which each lender is located for any complaints. Ask for references from recent borrowers, and follow up by speaking with these individuals about their experiences. Did they feel pressured? Did the lender explain all the details of the loan clearly and accurately? Were the actual costs of the loan close to the "good faith" estimate the borrowers were given? Would they deal with this lender again?

• Know what you want and need from your loan. There are many types of loans, and a good lender will work with you to identify what's most important to you. For example, if you are eager for a fresh financial start, find out if the lender offers any special loans that can help you improve your credit. If the lender can only offer one type of loan or doesn't seem interested in your specific needs, do some more shopping.

• Know and understand the terms of your loan. A lender should take the time to review and explain any paperwork or terms that aren't clear. If the loan representative brushes off your questions or won't provide the specifics of the loan in writing, beware. Be sure you have straight answers to the following questions:

- How much is the monthly payment?

- Will the monthly payment remain the same throughout the loan, or can it change?

- Does the loan have a balloon payment (a much higher payment, typically due at the end of the loan)?

- Is there any kind of penalty for prepayment?

• Know your rights as a consumer. You have the right to thoroughly read every loan document before you sign it, and to get copies of every paper you sign. Never sign any agreement that you don't understand and never sign a blank form.

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