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Finding the Right Loan

Resource: View our Santa Clarita Lending Website and Blog 

Does the prospect of arranging for a mortgage seem like trying to cross a minefield?

Here are some important questions you can ask lenders to help ensure that you get a good deal on your mortgage.

While the process of finding the right loan to finance your new home may seem daunting, it can be done successfully.  The most important rules of thumb is to arm yourself with knowledge.

Don't take a lender's word that the loan he's offering is the best one around.  Check with a number of lenders.  Take notes.  Do the math and compare your findings by keeping a folder of all loan offers and their terms.  If you don't understand any part of the loan process or the terms of a specific loan, ask questions until you're satisfied that you understand.  Or have a knowledgeable friend or an attorney help you by looking over loan offers and terms.  And make sure you get all offers in writing: if it's not in print, it's not a binding offer.  It's your money, so make sure to spend it wisely. 

Remember that your home is probably the most important--and most expensive--investment you will ever make.  Protect your family's security by shopping carefully for a mortgage.  A Paris911 free homebuyer or financial literacy class can help give you the knowledge and confidence to find a loan you can be happy with.  We aren't loan officers--nor do we push you toward specific lending institutions that might offer us a kickback--but we're here to make your dream of home ownership a reality, and we're dedicated to arming you with the knowledge that will get you there.

Important questions to ask lenders

When shopping for a loan:

  • What is your best rate today?
  • Can this rate be locked in? How long is this offer valid?
  • What are the total loan fees?
  • Is the rate fixed or adjustable?
  • What is the term (length) of the loan?
  • Is there an application deposit? How much is it, and how much is refundable?

When applying for a loan:

  • If I lock in my interest rate today, what is the best rate available?
  • What fees are involved?
  • What is the annual percentage rate (APR)?
  • Is there a balloon payment due on the loan?
  • Are there any prepayment penalties? What are they and for how many years are they in effect?
  • Does the interest rate increase if my payments are late?
  • What is the total monthly payment including taxes and insurance?
  • Do you charge overages (fee hikes designed to give more profit to the lender)?

If the loan is an Adjustable Rate Mortgage (ARM), be sure to ask:

  • What is the initial rate? How long will that rate stay in effect?
  • How often can the rate change? What are the rate and payment caps (limits) each year, as well as over
  • the life of the loan?
  • Can I convert (change) my adjustable rate loan to a fixed rate without doing a new loan?
  • Is there a prepayment penalty? If so, how long does it apply?

Make sure your lender gives you a copy of a good faith estimate of costs. This will give you a solid idea of what your total costs for getting the loan will be. Insist on receiving a copy of this document within 3 days of your loan application.

Beware the predatory lender!

While there are any number of reputable lenders out there, there are also those who don't have your best interests at heart, but whose loans are designed to make them excessive profit, or are structured in such as way as to make it difficult or impossible for you to keep up with payments. Remember that time-tested rule:

If it sounds too good to be true, it probably is.

Predatory lenders tend to target the elderly and disabled, and those with poor credit histories or lacking financial savvy. They offer high-cost loans, charge excessive interest rates and higher fees, and often keep secret the actual terms and costs of a loan. They may offer you a loan for which you don't qualify or convince borrowers to refinance frequently. Listen carefully to the lender's presentation. Does is sound too good to be true? Is their rate based on the value of the home to be financed rather than your income? Is a balloon payment part of the loan? Are you being pressured?

If so, be wary. Take the lender's information and compare it carefully to the terms of other loan offers you've received. Don't fall for flashy advertising: make sure the terms of any 'amazing deal' are spelled out for you in detail.

Good luck in your hunt for the best mortgage! And if we can be of any help to you, please let us know.

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Paris & Connor MacIVOR Paris911 with RE/MAX of Santa Clarita
Paris MacIVOR: 661-513-4620 DRE License # 01256647
Connor MacIVOR: 661.284.5429 DRE License # 01238257
Fax: 888-484-7748
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Paris 911 & Associates

25101 The Old Road, Suite 201, 203 & 205
Santa Clarita, CA 91381
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Paris 911 & Associates

27720 Dickason Avenue
Valencia, CA 91355
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