Vital Tips for Taking Advantage of Today’s Interest Rates
by: Fred Arnold
Today’s interest rates are incredibly attractive. Hovering around all-time lows, our current interest rates are drawing buyers into the market in droves. If you’re among the many Santa Clarita Valley residents looking to buy a home now, you’re in good company, for good reason. Buying a home at these interest rates will offer you an incredible opportunity to save thousands of dollars over the course of your loan.
However, because buying a home, or even refinancing a loan is a huge investment and decision, I encourage you to take your time in ensuring that you don’t overlook any crucial items. Here are vital tips to keep in mind before you make any big decisions or sign any documents.
1. Do not sign a contract without understanding all terms of the loan.
This sounds like a broad and general tip and there’s a reason for that. While your Mortgage Professional should explain your terms and fees, it is up to you to speak up if you are confused about any costs, fees, or terms. You owe it to yourself to make sure that you are fully aware of everything detailed in a contract. Don’t be afraid to ask for additional clarification or to ask to have documents reviewed by a third party prior to signing any contracts.
2. Keep copies of all documents with your signature.
Even if you just scan the documents and save them into your computer, it is wise to keep copies of all documents regarding your loan for easy access when you need them.
3. Get a second or even third opinion.
It can’t hurt to have your Financial Planner or CPA review your loan documents before you sign them. Possible tax burdens or credits may be pointed out to you that are beneficial or detrimental to your long-term financial plan.
4. Do not act under pressure.
Reputable and respected Mortgage Professionals wouldn’t dream of trying to talk you into a loan that you’re not comfortable with. If you feel pressured, walk away and find someone who genuinely wants to help you achieve both your goal of home ownership and your long-term financial goals.
5. Read your Good Faith Estimate (GFE) and then read it again.
Your GFE will spell out every single charge on your loan. However, that’s not to say that it is necessarily easy to understand. Have your Mortgage Professional go through it with you line by line, so that you understand where every dollar is going. Be sure to also look for potential problems such as any prepayment penalties, rate changes, or balloon payments.
6. Work with a local.
When selecting your Mortgage Professional, look to your own backyard. Working with a local lender helps ensure that you can meet with them as often as you’d like. More importantly, it ensures that they have a vested interest in helping to enhance their own reputation in the neighborhood through providing excellent service.
7. Get confirmation of your locked-loan in writing.
As soon as you’ve locked into an interest rate, ask for confirmation in writing. If your rate changes, request a new Good Faith Estimate and review it thoroughly.
8. Don’t sign blank forms or contracts.
Never sign contracts with missing numbers or blank spots. Missing fees, costs, or additional terms that “will be filled in later” may change your loan entirely. Do not sign them, under any circumstances.
With interest rates this low, it is probably one of the best times in your life to refinance your home or buy a new home. However, you must do your diligence to confirm that you understand exactly what you’re signing. By following these tips, you’ll feel comfortable in understanding your loan, and confident that you’re making a smart financial investment.
Fred Arnold is a Certified Mortgage Consultant, Chairman of the SCV Chamber of Commerce and mortgage professional at American Family Funding in Southern California. Fred hosts the radio show The Santa Clarita Business Hour on AM 1220 KHTS, as well as the televised program Out of the Rough on SCVTV.com, channel 20. He can be reached at 661-505-4300.