Get the best deal for you - 5 things you should know

If you are shopping for a mortgage in today's market you should be careful. Now more than ever loan officers are hungry for money and might be sneakier than ever to capture your business. A good mortgage can be a great financial decision for years to come, but a bad mortgage from a greedy loan officer could mean financial disaster in the future. Here are some tips that your loan officer doesn't want you to know when shopping for a mortgage.

1. You are due to get a good faith estimate when you give the loan officer enough information that they can pull your credit and they have a property address that you are looking to finance. On a refinance you must get a good faith estimate of your closing costs within three business days from when your loan officer has enough information to make a credit decision - i.e. when you give them your home address, date of birth, name, social security number. If you are purchasing a home, technically you are due a good faith estimate when you pick a home to purchase and give that address to your loan officer. You will have already given them your name, home address (which in this case doesn't matter), birthdate and ssn by this time.

2. Regarding your good faith estimate - everything on it is negotiable! Look closely at the items listed as loan discount fee, loan origination fee, mortgage broker fee, processing fee, and underwriting fee. You also want to scan down the page to see if you can find something that says "Yield Spread Premium" or "YSP" or "Lender Paid Broker Fee". If you are using a mortgage broker the YSP must be disclosed. The shame of our mortgage lending laws is that mortgage bankers, savings banks, regional banks, federal banks don't have to show you this fee like mortgage brokers do. The other shame of all of this is that many of the bad mortgage loans that are now turning into foreclosures were written by loan officers written at these very institutions who don't have to disclose to you these fees.

Every mortgage loan officer in the United States gets paid by the interest rate they sell you. You can think of it this way, the higher the interest rate the more money the loan officer is making. The higher the "margin" if you are getting an adjustible rate mortgage the more likely your loan officer is making more money. Also, if you are being charged a pre payment penalty, you can probably bet that your loan officer is making money on it. If the loan officer is charging you an origination fee, a loan discount fee you should question the loan officer what your interest rate would be if they didn't charge that fee. If they give you a higher interest rate, go shop and find out what someone else is going to give you. The lower of the two might be your choice.

3. The title insurance company who settles your loan is actually your choice, but very rarely is it presented to you this way. Especially with purchase transactions, realtors are pitched all the time by title companies for business and you better believe the realtor is getting something out of referring your sales transaction to that title company. It might not be obvious because it is actually illegal for the realtor to accept anything from the title company. Ask your realtor to use your own title company and see if you can detect any hesitation. If so, you might be getting in the way of some extras the realtor might not get if you use your own title company.

If you pick your own title company, you might be able to negotiate a lower fee on your own. Title companies have some leeway in their fees and if its you doing the asking directly, then you might get a better deal. It is worth checking around.

4. Looking at your annual percentage rate, APR. This is a very tough discussion topic because very few loan officers know how to give you an accurate APR for the deal that they quote you. The US government developed the APR in order to give you a way to compare loan programs. Essentially, the APR measures certain costs associated with your loan that the Feds technically say that you can't finance. However, you are financing them. Some of these things include the loan discount fee, mortgage broker fee, application fee, title fees, insurance etc. You can think of it this way, if the APR is calculated correctly, then if you were getting the exact same deal from two different mortgage companies then the APR should be exactly the same, but 9 out of 10 times it is not. Look at your good faith estimate and then your Truth In Lending (TIL) forms. If you are trying to compare two different deals and the APR of one is less than the other, but the fees with the lower APR are higher, then it is likely that the APR wasn't calculated correctly. So pay attention and look that these figures from several different companies. If you have questions ask your loan officer. They might or might not be able to answer the questions on your APR. If you are not satisfied with their answer look for another loan officer. Use your gut.

5. Don't pay up front fees with the exception of two things: a credit report fee, and an appraisal fee paid directly to the appraiser. If you write a check to your mortgage company in the form of an application fee you could be kissing your money goodbye. Mortgage companies who charge this fee are very stingy in giving it back if you decide not to use them for your mortgage. If they won't work on your loan until you pay them, then go get another mortgage company. There are plenty of companies out there who do a great job and don't charge this fee. Some of the biggest lenders in the country charge this application fee. It doesn't make them good. I know that I have caused a few folks to walk away from the bigger lender even after they have paid this money because I almost always can beat the bigger lender's deal.

So there you have it. Things you should know if you are looking for a new mortgage and your loan officer isn't telling you. For more information on the mortgage process, buying a home and other credit information go to www.getprequalified.com.